EURUSD Forecast And Technical Overview
It will be a shortened week amid the Easter Holiday, with full of major macroeconomic data release. We usually see strong activity in the first 3 days followed by consolidation. This year may be different because there are important economic reports scheduled for release on Thursday so volatility could extend until then.
Risk appetite took over financial boards at the end of the week after first-tier events failed to break the deadlock in price action. The EUR/USD pair advanced beyond the 1.1300 level for the first time this month, hitting 1.1323 early Europe and holing nearby amid soft US Consumer Confidence.
Additionally, data was better than expected with the German trade surplus growing and industrial production falling less but these reports are not enough to be optimistic about the euro. As I mentioned in my previous forecast, trade tensions between the European Union and the US are at a boiling point with President Trump threatening $11B in tariffs over Airbus subsidies. In response, the EU is preparing its own list of retaliatory tariffs worth over $22B. The World Trade Organization hasn’t officially recommended a penalty for the EU but if they do or the US pushes ahead with the tariffs, it will be very damaging to the region’s economy – and the euro. This is a risk of which the central bank is fully aware.
The upcoming week will start with the release of German’s April ZEW survey on Tuesday and EU March inflation on Wednesday, both measures of local economic health. If the data softens, reinforcing the central bank’s concerns, EURUSD will resume its slide.
However, the critical figures will come on Thursday, with preliminary April Markit PMI for the Union and US March Retail Sales. Markit data could reaffirm or deny the previous fall to multi-year lows in manufacturing activity, and the EUR will react in consequence. Most markets are closed for Good Friday and Easter Monday (the US is only closed Friday) so many traders will leave early for their long weekend and look to square up or reduce their positions shortly after the US retail sales report is released.
The intermediate-term trend is still bearish and the pair remains as long as it makes daily closings below 1.15500.
The pair must break above 1.13600 resistance first. And the upside is capped by 1.14400 SMA 200 Daily.
On the smaller chart timeframes, the pair broke the SMA 200 H4 chart. The pair tested 1.13200 resistance and ended the week just below 1.13000 at 1.12970.
Our latest short trade setup was executed at 1.13120. The pair must break below 1.12600 support in order to continue its bearish move. – A worse than expected EU PMI may trigger the bearish move- Below 1.12600, we will focus on 1.12200 and 1.11800.
A better than expected EU PMI could send the pair 1.13600 and 1.14200. We keep our bearish bias. Our targets are 1.1000 and 1.08.
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