Technical Analysis

EUR/USD Analysis – May 24, 2021

By LonghornFX Technical Analysis
May 24, 20214 min

Ascending Triangle Pattern

The EUR/USD pair was closed at 1.2179 after placing a high of 1.2241 and a low of 1.2161. EUR/USD fell on Friday and reached below 1.2200 level amid renewed strength in the U.S. dollar driven by better-than-expected macroeconomic data from the U.S.A. On Friday, the U.S. Dollar Index that measures the greenback value against the basket of six major currencies rose above the $90 level. It supported the greenback that ultimately added pressure on the EUR/USD pair.

Meanwhile, during the Eurogroup meeting, the Eurogroup President Paschal Donohoe said that the economic recovery of the EU was still some way to go due to uncertainty associated with the coronavirus pandemic and its variants that require agile policies. He added that the Recovery and Resilience Facility (RRF) funds and the reopening of economies accelerated economic recovery momentum.

Euro remained under pressure on Friday because of the dismal data report about the German Flash Manufacturing PMI that fell short of expectations in May and weighed heavily on single currency despite other positive data and dragged the pair EUR/USD further on the downside.

On the data front, at 12:15 GMT, the French Flash Manufacturing PMI for May increased to 59.2 against the expected 58.6 and supported Euro, and limited the losses of EUR/USD pair. The French Flash Services PMI also surged to 56.6 against the projected 53.0 and supported single currency Euro. At 12:30 GMT, German Flash Manufacturing PMI declined to 64.0 against the forecasted 66.0 and weighed heavily on the single currency Euro and added further pressure on EUR/USD.

On the other hand, German Flash Services rose to 52.8 from the predicted 52.0 and supported the single currency Euro. At 13:00 GMT, the Flash Manufacturing PMI from the whole bloc remained flat at 62.8. The Flash Services PMI from the Euro area advanced to 55.1 against the anticipated 52.5 and supported Euro. At 18:32 GMT, the Consumer Confidence from Europe in May reached -5 from the predicted -7 and supported single currency Euro and caped further EUR/USD pair losses.

From the U.S. side, at 18:45 GMT, the Flash Manufacturing PMI for May advanced to 61.5 against the projected 60.0 and supported the U.S. dollar and added further losses in EUR/USD pair. The Flash Services PMI also increased to 70.1 against the predicted 64.3 and helped the U.S. dollar that kept EUR/USD under pressure. At 19:00 GMT, the Existing Home Sales in April dropped to 5.85M against the estimated 6.09M and weighed the U.S. dollar those further capped losses in EUR/USD pair.

Furthermore, the European Central bank President Christine Lagarde played down the possibility of a significant change away from the current stimulus settings on Friday. While talking about tapering the emergency bond-buying program, she said that it was too early and unnecessary to debate longer-term issues. She said that ECB’s commitment to the euro area was to maintain favourable financing conditions throughout the whole pandemic period, and it will remain the same. This added further pressure on Euro and dragged EUR/USD pair further lower on Friday.

EURUSD Intraday Technical Levels

Support Resistance

1.2186 1.2247

1.2146 1.2270

1.2124 1.2309

Pivot Point: 1.2208

EUR/USD - Technical Outlook

The EUR/USD is trading with a bullish bias at 1.2195, maintaining a new ascending triangle pattern on the 4-hourly timeframe. The EUR/USD pair has formed a bullish engulfing pattern and an inside bar-up pattern over the 1.2165 level support area. Above this, the pair is bouncing off, perhaps, to trade towards the resistance area of 1.2240 level. This level is being extended by a triple top pattern on a 4-hour chart. The EUR/USD’s support holds around 1.2129 levels, and these expose the pair towards the 1.2129 level. All the best!


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