Technical Analysis

EUR/USD Analysis – May 11, 2021

By LonghornFX Technical Analysis
May 11, 20213 min

Fibonacci Extension in Play!

The EUR/USD pair closed at 1.2129 after placing a high of 1.2178 and a low of 1.2127. After rising for three consecutive sessions, the EUR/USD pair dropped on Monday and broke its bullish streak after Euro came under pressure from contradicting messages from ECB members. According to Governing Council member Martins Kazaks, the European Central Bank could choose to cut down its bond-buying program as early as next month if the Eurozone economy continues showing signs of growth and recovery.

Kazaks said that the economy would need significant monetary stimulus well beyond the end of the pandemic. The monetary stimulus that has been delivered by emergency bond purchases, negative interest rates, and targeted long-term loans that keep banks’ credit for companies and households loose. Kazaks added no current reason to believe PEPP will be extended beyond its March 2022 end date and said that economic developments might even allow the ECB to finish the program without using up the entire 1.85 trillion euros.

On the other hand, another ECB official Olli Rehn said that ECB should also adopt the Fed’s approach of allowing inflation to rise above the 2% target to compensate for past misses. This would mean keeping the policy loose for longer. The difference of opinions from different ECB officials kept Euro under pressure and weighed on EUR/USD pair.

On the data front, at 13:30 GMT, the Sentix Investor Confidence rose to 21.0 against the forecasted 14.9 and supported Euro that capped further losses in EUR/USD pair on Monday. There was no macroeconomic data from the U.S. front for the session, so the currency pair remained under pressure.

The U.S. Dollar Index (DXY) that measures the value of the greenback against the basket of six major currencies, surged a little on Monday and reached a $90.34 level that supported the U.S. dollar and added further losses in EUR/USD pair. The U.S. Treasury yields on a 10-year note also rose and reached above 1.60%, pushing the U.S. dollar higher and keeping EUR/USD under pressure.

Europe has delivered about 200 million coronavirus vaccine doses to its people. Eurozone has reached closer to achieving its goal of inoculating 70% of its adult population by summer. As the infection rate has plunged and the vaccination rate has increased, Europe has started reopening its cities and beaches, and the hopes have been increased that this summer’s holiday season could be saved before it is too late. The reopening of European countries and international travel from Summer played an essential role in keeping the losses of EUR/USD par limited on Monday.

EURUSD Intraday Technical Levels

Support Resistance

1.2161 1.2180

1.2150 1.2188

1.2142 1.2199

Pivot Point: 1.2169

EUR/USD - Technical Outlook

The EUR/USD is trading with a bullish bias at the 1.2144 level. The single currency is gaining bullish momentum against the U.S. dollar amid weaker than expected non-farm payroll data. The EUR/USD pair has closed a bullish engulfing pattern that suggests odds of a strong bullish trend in the EUR/USD pair on the daily timeframe. On the higher side, the pair faces resistance at 1.2177 level. The breakout of this exposes the EUR/USD pair until the 1.2250 level. On the lower side, the pair gains support at 1.2085, which is extended by 20 & 50 periods of EMA level. Below 1.2085, the EUR/USD’s next support stays at the 1.2050 level. The primary focus will remain on the technical levels, as the economic calendar isn’t scheduled to report any significant event today. All the best!


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