EUR/USD: The technical factors are pointing towards an increase, is this sustainable?

2/2

EUR/USD H1

2/2

The EUR/USD pair rose sharply yesterday, to the point of calling into question the bias chart bearish, at least in regards to the trend of the short-term.

It should be remembered that the increase of the pair Euro Dollar has been driven by a generalized decline of the greenback, a decline that has clearly been accelerated by the publication of a CPI US in the month of April, below expectations.

The monthly CPI general, in fact, shown to 0.2%, against 0.3% expected and -0.1% previously, while the CPI Core, monthly came in at 0.1% versus 0.2% expected and previously.

From a graphical point of view, one can record several signals in the hourly data to estimate that a bullish reversal is underway.

Even before the publication of the CPI, US, EUR/USD had begun his rise in the morning, breaking in a first time the line of downward trend visible since May 7.

The acceleration upward due to the CPI in US was then the opportunity for new signals charts, with a break above the moving average 100 hours and the psychological level of 1.19. Then, the rise has again been confirmed by a break above a trend line to the downside longer-term visible since 2 May.

As regards the thresholds to watch for in the short term, we may consider a first resistance 1.1946-1.1950 (moving average 200 hours, and the top of yesterday), before 1.1975 and 1.2030, then 1.2030. The downside, first support lies at 1.1900-1.1896, before 1.1865-70, 1.1840-45 and 1.1820-25.

A break above 1.1950 would send a positive signal further, while one may consider that the profile uptrend that is taking shape is no longer relevant under 1.1865-70.

Let us not forget however that the end of the week approach, and that the benefits could come to free-ride on the current trend. All the more that in the long term the macroeconomic context in the background is rather in favour of a decrease of the Euro against the Dollar, if only because the ECB is reluctant still to announce the end of its QE, while the Fed have already started the process of normalization of monetary for a long time.

Finally, in regards to the important statistics, the economic calendar will not be especially busy this Friday, as from the beginning of the week.

Traders will be watching, however, the price index for import and export US-14: 30, and then the consumer confidence index US computed by the University of Michigan, at 16h, in view of their possible influence on the Dollar.

Leave a Reply