Technical Analysis

EUR/USD Analysis – May 04, 2021

Three Black Crows to Drive Sell!

The EUR/USD pair closed at 1.2060 after placing a high of 1.2076 and a low of 1.2014. The European currency regained the momentum and pushed EUR/USD pair back above the $1.2050 level at the beginning of the week. The single currency Euro managed to reverse the course of EUR/USD after two consecutive sessions of losses that had dropped the pair near 1.2000 level. The strength in European currency was driven by the renewed weakness in its rival greenback.

The U.S. Dollar Index was weak across the board at below 91 level on Monday due to declining U.S. treasury yields. The yields on the benchmark 10-year note fell below 1.60% to 1.57% and weighed heavily on the U.S. dollar, ultimately pushing EUR/USD pair higher. Meanwhile, the strength in Euro was also driven by the rising yields on key German 10-year bonds that climbed further to levels last seen in March 2020 around -0.16%.

On the data front, at 11:00 GMT, German Retail Sales in March surged to 7.7% against the projected 2.9% and supported single currency Euro that added further gains in EUR/USD pair. At 12:15 GMT, Spanish Manufacturing PMI dropped to 57.7 against the forecasted 59.1 and weighed on Euro that capped further gains in EUR/USD pair. At 12:45 GMT, the Italian Manufacturing PMI remained unchanged at 60.9. At 12:50GMT, French Final Manufacturing PMI also remained flat with the expectations of 59.2. At 12:55 GMT, German Final Manufacturing PMI remained unchanged as expected 66.4. At 13:00 GMT, the Final Manufacturing PMI from the whole bloc dropped to 62.9 against the predicted 63.3 and weighed on Euro that capped further upside in EUR/USD pair.

From the U.S. side, at 18:45 GMT, Final Manufacturing PMI from the U.S. remained flat with the projections of 60.5. At 19:00 GMT, the ISM Manufacturing PMI in April reduced to 60.7 against the anticipated 65.0 and weighed on the U.S. dollar that pushed EUR/USD pair further higher. Construction Spending in March declined to 0.2% against the predicted 1.7% and weighed on the U.S. dollar and added further upward momentum in EUR/USD pair. ISM Manufacturing Prices surged to 89.6 against the estimated 86.0 and supported the U.S. dollar.

Euro was also strong in the market amid the rising optimism as countries across Europe started to relax coronavirus restrictions. The declining rate of new cases of coronavirus in Europe raised the confidence of governments to start easing restrictive measures to support economic recovery.

Greece has announced that it will reopen outdoor service for restaurants and cafes on 3rd May. France has already started easing on Monday by lifting domestic travel restrictions and resuming high school classes. Denmark reopened bars, restaurants, cafes, libraries, and football stadiums last week. Belgium has plans to permit outside dining in restaurants and bars on 8th May. Many other European countries, including Italy, Netherlands, Poland, Portugal, and Spain, also followed the trend and started easing that helped Euro and pushed EUR/USD pair higher.

On the other hand, the U.S. dollar remained weak on Monday as the Fed official John William said that despite the economic recovery and better U.S. macroeconomic figures, the Bank would not stop its support to the economy. Williams was also not concerned about the inflation reaching higher levels and downplayed the concerns that dragged the U.S. dollar lower and added gains in the EUR//USD pair.

EURUSD Intraday Technical Levels

Support Resistance
1.2024 1.2086
1.1988 1.2112
1.1962 1.2148
Pivot Point: 1.2050

EUR/USD – Technical Outlook

The EUR/USD fell dramatically to trade at 1.2035, maintaining a new trading range of 1.2034 – 1.2050. The breakout of this range will open further room for buying or selling in the EUR/USD pair. In case of a bullish breakout, the EUR/USD’s next resistance prevails at 1.2057 and 1.2075 levels. Alternatively, the bearish breakout can expose the pair towards a 1.2000 support level. On Tuesday, we don’t have any high-impact economic events. However, the trader’s focus will remain on the Trade Balance and Factory Orders m/m economic data from the U.S. economy. Economists expect mixed numbers; since these are considered low-impact economic events, these may not drive any sharp price action in the EUR/USD pair. Yet it’s worth keeping an eye on them during the New York session. All the best!