Although it looks like USD had a good week, however, when it comes to fundamentals, both currencies have their own issues, but still USD gained against EUR during the previous week. The ECB is increasing its interest rates amid strong inflation figures, but ECB officials still lack potential to convince markets to buy Euro. At the same time, the US Government is ready to reach its debt ceiling at the beginning of June or eventually July, which increases the probability of the US default on some of its debt obligations in the coming period. Such an event would have a strong impact on all markets around the world, and not just the US market.
As per current charts, it looks like the Euro took sort of a short-term bear side. RSI was pushed below level of 50 during the week, reaching the level of 41. It increases the probability of further moves of the pair to the down side, until a clear oversold side is reached. At the start of the week the pair for one more time-tested resistance at 1.1, but without strength to break it, the pair reverted to the downside, and lowest weekly level at 1.084, which is a short-term support line for eurusd. It coincides with the MA50 line. Eurusd will start the week ahead by testing this line. Currently there is a lower probability that this line will be breached to the downside at this moment. On the opposite side, the currency pair might shortly revert to the upside at least to the level of previous highs at 1.1 but it should not be expected that this level will be breached to the upside
Important news to watch during the week ahead are:
As per current charts, it looks like the Euro took sort of a short-term bear side. RSI was pushed below level of 50 during the week, reaching the level of 41. It increases the probability of further moves of the pair to the down side, until a clear oversold side is reached. At the start of the week the pair for one more time-tested resistance at 1.1, but without strength to break it, the pair reverted to the downside, and lowest weekly level at 1.084, which is a short-term support line for eurusd. It coincides with the MA50 line. Eurusd will start the week ahead by testing this line. Currently there is a lower probability that this line will be breached to the downside at this moment. On the opposite side, the currency pair might shortly revert to the upside at least to the level of previous highs at 1.1 but it should not be expected that this level will be breached to the upside
Important news to watch during the week ahead are:
- Euro: GDP growth rate, Inflation Rate for April,
- USD: Retail Sales, Industrial Production, Building Permits
- Fed Chair Powell speech is scheduled for May 19th, which could bring some increased volatility to the markets.
