EUR/USD Analysis - April 14, 2021

Upward Channel in Play!

The EUR/USD was closed at 1.1946 after placing a high of 1.1956 and a low of 1.1878. EUR/USD pair extended its gains and reached its highest level since March 18, above 1.195 level on Tuesday, despite dismal European economic data. The rising EUR/USD prices could be attributed to the U.S. dollar's weakness across the board. The U.S. dollar was weak on Tuesday against the basket of six major currencies as it fell to 91.78 level amid the declining U.S. Treasury yields. The yields on 10-year Treasury note fell by 5.8 basis points to 1.618%, and the yields on 30-year Treasury note also fell by five basis points to 2.2977%. The benchmark Treasury yields fell on Tuesday amid the high demand for a 30-year bond auction and weighed on the greenback that ultimately pushed the currency pair EUR/USD higher.

Meanwhile, the U.S. dollar was also weak across the board amid the rising concerns that the recent increase in prices was not temporary. It would force the Federal Reserve to change its decision about monetary policy. The U.S. Fed has said that it would continue its support to economic recovery until job figures improve, but the recent jump in CPI suggests otherwise. These concerns kept the U.S. dollar under pressure on Tuesday, and hence, the EUR/USD pair reached above 1.19500 level.

On the data front, at 11:00 GMT, the German WPI for March raised to 1.7% against the expected 0.6% and supported single currency Euro that added further gains in EUR/USD pair. At 13:00 GMT, the Italian Industrial Production dropped to 0.2% against the forecasted 0.7% and weighed on single currency Euro that capped further gains in EUR/USD pair. At 14:00 GMT, the ZEW Economic Sentiment for April dropped to 66.3 against the forecasted 77.2 and weighed on single currency Euro and limited the currency pair EUR/USD's rising prices. For April, the German ZEW Economic Sentiment also declined to 70.7 against the expected 79.1 and weighed on the single currency Euro.

At 15:00 GMT, NFIB Small Business Index remained flat with the anticipated 98.2 that did not affect U.S. dollar prices. At 17:30 GMT, the Consumer Price Index (CPI) for March surged to 0.6% against the projected 0.5% and supported the U.S. dollar that capped further upside in EUR/USD. In March, the Core CPI also rose to 0.3% against the projected 0.2%, supported the U.S. dollar, and limited the rising prices of EUR/USD.

Furthermore, the use of the vaccine by Johnson & Johnson was also stopped after reports of rare blood clotting. US FDA approved this vaccine in February, and now U.S. health officers have suggested stopping its rollout because of rare blood clotting reports. This vaccine followed the same case of AstraZeneca and now, along with the U.S., South Africa, and European Union, also stopped its usage. This also raised concerns about the USA's economic recovery and weighed on the U.S. dollar that ultimately added further upward momentum in EUR/USD pair.

EURUSD Intraday Technical Levels

Support Resistance

1.1898 1.1976

1.1849 1.2005

1.1820 1.2053

Pivot Point: 1.1927 

EUR/USD - Technical Outlook 

On Wednesday, the EUR/USD continues trading with a bullish bias at 1.1962 level amid a stronger Euro and weakness in the U.S. dollar. The MACD and the RSI values hold at 0.002 and 69, suggesting a definite upward trend in the pair. On the 4-hour chart, the EUR/USD has also closed the "Three White Soldiers" candlestick pattern that depicts bullish bias among investors. Speaking about the leading and lagging indicators, the 20 and 50 periods EMA are supporting bullish trends in the EUR/USD pair. Technically, the indicators support a bullish bias in the EUR/USD pair; as you can see on the 4-hour chart, the pair has formed an upward channel that is likely to extend support around the 1.1909 level. The upward channel provides resistance at 1.1976 and 1.20050 levels today. Lastly, the investor's focus will stay on the series of speeches from the ECB President Lagarde and Fed Chair Powell as these can drive volatility in the market. All the best!