EUR/USD Analysis - April 19, 2021

Bullish Bat Pattern Continue to Play!

The EUR/USD closed at 1.1983 after placing a high of 1.1996 and a low of 1.1950. EUR/USD pair posted gains on Friday amid weakness in U.S. dollar after the speculations for the hawkish Fed faded out of the market. The EUR/USD exchange rate capitalized on the weakness of the U.S. dollar on Friday whereas, the single currency Euro also found support from the improving Eurozone recovery hopes. Despite being at the biggest risk due to slow vaccine rollout, the Eurozone currency managed to gain a little support in recent weeks, primarily due to weakness in its biggest rival, the U.S. dollar. The two currencies share a negative correlation that means the Euro often climbs in times of declining U.S. dollar.

Even though the Eurozone economy has started recovering from the pandemic, the recovery rate was much weaker due to the slower vaccine rollout that poses the biggest threat to the economy. In contrast, Britain and the U.S. have successfully inoculated large portions of their populations. The eurozone that was already facing slow delivery of vaccines, has recently faced more troubles due to rising infection rates across the region. These negative developments in the bloc affected the macroeconomic releases from the area. They kept the single currency Euro under pressure that limited the rising prices of the EUR/USD pair on Friday.

On the data front, at 13:05 GMT, the Italian Trade Balance in February dropped to 4.75B against the expected 4.95B and weighed on the single currency Euro and capped further gains in EUR/USD pair. At 14:00 GMT, the Final CPI for the year from the whole bloc remained flat at 1.3%. The Final Core CPI for the year also remained unchanged at 0.9%. The Trade Balance from the bloc dropped to 18.4B against the forecasted 21.9B and weighed on single currency Euro and capped further upside momentum in EUR/USD pair. At 17;30 GMT, Building Permits in March remained flat with the anticipated of 1.75M. In March, the Housing Starts surged to 1.74M against the predicted 1.60M and supported the U.S. dollar that limited the rising prices of the EUR/USD pair. At 19;00 GMT, the Prelim UoM Consumer Sentiment in April declined to 86.5 against the expected 88.9 and weighed on the U.S. dollar that added further gains in the EU/USD pair. The Prelim UoM Inflation Expectations rose in April to 3.7% against the previous 3.1%.

On the other hand, the recent rally in the greenback was largely due to the thought that revival from the coronavirus pandemic would drive inflation higher that will pressure the Federal Reserve to tighten monetary policy. However, these speculations ended after the dovish comments from Fed Chair Jerome Powell, along with the largely unsurprising U.S. inflation data over the past week. After the speculations for the Fed tightening faded away, the U.S. dollar saw a decline in its demand that eventually helped EUR/USD pair to post gains.

The U.S. Dollar Index on Friday also declined and reached 91.5 level that also added further gains in EUR/USD pair. However, the gains in EUR/USD on Friday remained consolidated because of the rising geopolitical tensions between U.S. and China and U.S. and Russia. These tensions raised the safe-haven demand in the market that supported the greenback and kept the gains in currency pair EUR/USD under pressure for the day.

EURUSD Intraday Technical Levels

Support Resistance

1.1949 1.1989

1.1933 1.2011

1.1910 1.2028

Pivot Point: 1.1972

EUR/USD - Technical Outlook

On Monday, the technical side of the EUR/USD continues to trade sideways due to lack high-impact economic events from both of the Nations, the U.S., and the Eurozone. The single currency Euro is consolidating below an immediate resistance level of 1.1938 level. This resistance level is extended by a triple top pattern that we can see on the daily timeframe. On this daily timeframe, the EUR/USD closed a bullish bat pattern that typically drives a bullish trend in the market, and it did push the single currency Euro higher towards 1.1983 resistance. On the higher side, a breakout of triple top resistance 1.1983 can open room for a further bullish trend. The EUR/USD's next resistance stays at 1.2043, 1.2112, and 1.2246 areas. All the best!