EUR/USD Analysis - April 29, 2021

Upward Momentum Continues!

The EUR/USD pair was closed at 1.2135 after placing a high of 1.2136 and a low of 1.2056. EUR/USD pair reached its highest level since February 26 on Wednesday amid fresh weakness in the U.S. dollar after the Federal Reserve meeting. As expected, the Fed kept its interest rates unchanged at the near-zero level and the monthly pace of asset purchases at the same $120 billion level. The statement issued after the meeting indicated that the economy and the labor market have strengthened due to successful vaccination campaigns. Still, the bank said that it would continue to support the economy through stimulus and lower interest rates as more than 8 million people were still jobless compared to the pre-pandemic levels.

During Powell's conference, the Fed chair explained that a transitory rise of inflation would not warrant a hike in interest rate. He also said that this was not the time to start talking about reducing the asset purchase program. His comments added further pressure on the already weak U.S. dollar as U.S. Treasury yield on benchmark note of 10-year fell to 1.60% from 1.65%.

The U.S. Dollar Index that measures the greenback's value against the basket of six major currencies fell to 90.53 level on Wednesday and weighed on the U.S. dollar. The comments of Powell also triggered a rally in Wall Street and in metals that added further weakness in greenback and supported the gains in EUR/USD pair.

On the data front, at 11:00 GMT, the German GfK Consumer Climate dropped to -8.8 against the expected -4.1 and weighed on the single currency Euro that capped further gains in EUR/USD pair. From the U.S. side, at 17:30 GMT, the Goods Trade Balance from the U.S. declined to -90.6B against the projected -88.2B and weighed on the U.S. dollar added further gains in EUR/USD pair. The Prelim Wholesale Inventories rose to 1.4% against the estimated 0.5% and weighed on the U.S. dollar and supported the upward trend in EUR/USD pair. Furthermore, the upward momentum in EUR/USD pair could also be attributed to the latest comments from the German pharmaceutical company BioNTech. On Wednesday, Ugur Sahin, whose company developed the first widely approves shot against coronavirus with U.S. partner Pfizer, predicted that about 50-60% of the European population would have received the vaccination end of June.

Sahin said that more than half of Europe's population should have received the coronavirus vaccine in the next two months that will allow governments to consider easing lockdown rules for immunized people. He suggested that Europe could reach herd immunity in July and August and cautioned that children would still be among those at risk. These comments from Ugur Sahin added strength to the single currency euro and pushed EUR/USD prices even higher on Wednesday.

EURUSD Intraday Technical Levels

1.2067 1.2104

1.2043 1.2117

1.2030 1.2140

Pivot Point: 1.2080

EUR/USD - Technical Outlook

The EUR/USD is trading at 1.2129 level on Thursday, having violated the narrow trading range of 1.2065 – 1.211. The recent bullish breakout has driven EUR/USD pair into the overbought zone; as we can see, the RSI is testing 70. The 20 & 50 periods exponential moving averages support buying trends; however, their values hold far away from the CMP (current market price). This demonstrates that the bulls are getting exhausted, and the EUR/USD is ready for a bearish correction. The EUR/USD pair may find support at 1.2115 and 1.2078 levels. Traders will be keeping their focus on the Advance GDP q/q figures due to come out from the U.S. economy. The data is expected to rise from 4.3% to 6.8%, and it can help support bullish bias in the U.S. dollar today. All the best!