Bears could return with Powell’s testimony
Current price EUR / USD: 1.1916
- ECB President Christine Lagarde said a tightening would be premature.
- The dollar corrected lower in a risk scenario but remains the strongest.
- EUR / USD meets buyers around critical Fibonacci resistance at 1.1917.
EUR / USD recovered some ground earlier in the week, hitting an intraday high of 1.1920. The lead was mostly corrective, as the greenback was extremely overbought after the Fed’s announcement on Wednesday. The macroeconomic calendar had little to offer, but policymakers were on the line. European Central Bank President Christine Lagarde said the outlook for the euro area economy is brightening as the pandemic situation improves, but warned of the need to remain vigilant, adding that a tightening would be premature.
In the United States, St. Louis Fed Chairman James Bullard noted that they would no longer need emergency policies when the pandemic ends, but added that low interest rates and the era of low inflation would not end anytime soon. In addition, Dallas Fed Chairman Robert Kaplan is in favor of “taking your foot off the accelerator as soon as possible.” The country released the Chicago Fed’s national activity index, which improved to 0.29 in May from -0.09 previously.
On Tuesday, the EU will release the preliminary estimate of consumer confidence in June, forecast at -3 against -5.1 previously. U.S. Federal Reserve Chief Powell will testify on the Fed’s emergency lending programs and current policies before the House subcommittee on the coronavirus crisis.
Short-term technical outlook EUR / USD
EUR / USD is holding close to its daily high, stuck around the 61.8% retracement of its March / May rally at 1.1917. The 4 hour chart shows that a firmly bearish 20 SMA head firmly lowers a few pips above the mentioned Fibonacci resistance. Technical indicators corrected extreme oversold readings, losing upward force into negative levels, reflecting lack of buying interest. Corrective advance may continue if the pair advances beyond the daily high, but bears will hold control as long as it is trading below 1.2000.
Support levels: 1.1885 1.1840 1.1800
Resistance levels: 1.1920 1.1960 1.2000
See live VSheart for EUR / USD