- US Dollar gains momentum during the American session amid risk aversion.
- Key data ahead: US GDP on Thursday and Euro area inflation on Friday.
- EUR/USD hits fresh 13-month highs but retreats again.
Despite reaching fresh YTD highs and rising on Wednesday, the bullish outlook for the EUR/USD in the short term has remained unchanged. The pair was rejected from the recent top and pulled back as the US Dollar strengthened. The time for a rally above 1.1050 is running out.
The German Gfk Consumer Confidence survey improved in May from -29.3 to -25.7. On Thursday, Eurozone (EZ) consumer confidence data is due. The crucial day will be Friday, with German inflation and EZ GDP growth. Next week is the European Central Bank (ECB) meeting. A rate hike looks like a done deal, but the question remains: 25 or 50. The latest round of data favors a 50 basis points hike but renewed banking concerns and slowing inflation offers arguments to doves.
The Euro outperformed on Wednesday, while the US Dollar posted mixed results. On the same day, EUR/USD hit fresh 13-month highs, and AUD/USD and NZD/USD dropped to the lowest in a month. However, the Dollar ended the day stronger as Wall Street slipped again. On Thursday, the US will report Q1 GDP and Consumer inflation, critical numbers ahead of next week’s FOMC meeting.
EUR/USD short-term technical outlook
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The EUR/USD rose on Wednesday and peaked at 1.1094, the highest level since March 2022, then pulled back below 1.1050. The trend is up and solid; however, the Euro failed again to make a sustainable run toward 1.1100. The more it takes, the more likely it is to stage a deep correction. But with critical events ahead, investors may stay on the sidelines.
The daily charts show EUR/USD supported by a bullish 20-day Simple Moving Average (SMA) at 1.0950. The 4-hour chart presents the pair above an uptrend line. Fresh highs are on the table as long as it remains above 1.0970; a break below would initially target 1.0950 and then 1.0910.
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