HomeForex UpdatesEUR/USD Outlook: Euro Extends Consolidation above 5-12 months Low

EUR/USD Outlook: Euro Extends Consolidation above 5-12 months Low

The Euro extends consolidation above five-year low into fourth straight day, with sideways buying and selling reflecting quiet mode forward of Fed’s coverage choice, due on Wednesday.

Bears are taking a breather after almost 5% drop in April, with the only foreign money being strongly deflated by danger aversion and strong greenback on safe-haven shopping for and expectations for extra aggressive Fed.

Repeatedly capped restoration in previous 4 days, counsel that general construction stays firmly bearish and the bigger downtrend is prone to resume after a quick pause.

Close to-term image was additional damage by sturdy rise in European producer costs (Apr PPI 36.8% y/y from 31.5% in Mar and above forecast for 36.3% rise) that alerts persisting value pressures and warns that inflation may rise additional after hitting new document excessive final month.

The US central financial institution is extensively anticipated to hike rate of interest by 50 foundation factors to 1% on the finish of two-day coverage assembly on Wednesday, with elevated hawkish stance signaling a variety of hikes in coming months that makes the greenback extra engaging to buyers.

Continuation of bigger EURUSD’s downtrend from Feb 2021 peak would search for check of key longer-term assist at 1.0340 (Jan 2017 low), the final impediment on the way in which in the direction of targets at 1.0069 (Fibo 76.4% of 0.8225/1.2039, 2000/2008 ascend) and 1.0000 (parity).

Firmly bearish technical research on all bigger timeframes, assist state of affairs, as 4-hr techs lose bullish momentum and add to warnings.

Nonetheless, some analysts counsel that strongly elevated US greenback could present excellent ranges for contemporary shorts, on ‘purchase the rumors – promote the info’ state of affairs.

Res: 1.0580; 1.0648; 1.0700; 1.0746.
Sup: 1.0490; 1.0471; 1.0400; 1.0340.

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