Technical Analysis

EUR/USD Analysis – May 05, 2021

By LonghornFX Technical Analysis
May 5, 20213 min

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The EUR/USD pair was closed at 1.2015 after placing a high of 1.2061 and a low of 1.1999. The currency pair EUR/USD dropped on Tuesday amid the strength in the U.S. dollar along with the risk-off market sentiment for the day. A lack of macroeconomic data from the Europe side also played an essential role in keeping the currency pair EUR/USD on the red line. From the European side, at 11:45 GMT, the French Gov. Budget Balance remained flat with the expectations of -60.1B. On the other hand, from the U.S. side, at 17:30 GMT, the Trade Balance from the United States for March remained flat with the forecasts of -74.4B. At 18:52 GMT, the IBD/TIPP Economic Optimism declined to 54.4 against the predicted 56.1 and weighed on the U.S. dollar that capped further losses in EUR/USD. At 19:00 GMT, Factory orders in March also fell to 1.1% against the anticipated 1.3% and weighed on the U.S. dollar, limiting the downfall in EUR/USD pair.

The mixed signals from the U.S. Treasury Secretary Janet Yellen and Fed’s Kashkari also kept the EUR/USD currency pair under pressure on Tuesday. Yellen took a U-turn from her early comments supporting rate-hike that added weight on the U.S. dollar. Whereas the President of the Federal Reserve Bank of Minneapolis, Neel Kashkari, highlighted inflation as the crucial figure to back the Fed’s futures moves. The risk-aversion market sentiment was supported by the initial comments from Yellen in favor of rate hike joined with the coronavirus woes in Asia as well as the downbeat economic data from the U.S. the rising risk-off market sentiment weighed on the risk-sensitive EUR/USD pair and dragged its prices downward. The same also put pressure on the U.S. Treasury yields; the 10-year note fell on Tuesday to 1.562% whereas, the U.S. Dollar Index reached 91.39 level.

The strength in the U.S. dollar kept the currency pair on the red line as the U.S. stocks were lower on Tuesday. The Dow Jones Industrial Average was down by 0.7%, and NASDAQ was down by 0.4%, with S&P 500 Futures down by 0.1%. Greenback also got support from the latest comments made by the San Francisco Federal Reserve Bank President Mary Daly on Tuesday. Daly said that the U.S. economy was a long way from achieving the goals set by the Fed of full employment and 2% inflation, and the time has not yet come to start talking about reducing recovery support. The rising strength in the U.S. dollar added further losses in EUR/USD pair.

EURUSD Intraday Technical Levels

Support Resistance

1.1989 1.2051

1.1963 1.2087

1.1928 1.2112

Pivot Point: 1.2025

EUR/USD - Technical Outlook 

Technically, the EUR/USD is trading with a bearish bias at 1.2005 level, having dropped from 1.2065 20 & 50 EMA crossover level. The pair is still maintaining a trading range of 1.2034 – 1.2005, and a breakout of this range will open additional 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 1.1940 support level. On Wednesday, the trader’s focus will stay on the ADP Non-Farm Employment Change and ISM Services PMI figures from the U.S. economy. Typically these economic events have a substantial impact on the market. Economists expect strongly positive numbers from the U.S. and can underpin the greenback’s demand, keeping the pair bearish. Therefore, it’s worth monitoring these economic events today. All the best!


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