Key Highlights
- The Euro formed a solid support above 1.1510 and bounced back against the US Dollar.
- There was a break above a connecting bearish trend line with resistance at 1.1650 on the 4-hours chart of EUR/USD.
- The Euro Zone CPI in June 2018 increased 2% (YoY), more than the last reading of +1.9%.
- Today in the US, the ISM Manufacturing PMI for June 2018 will be released, which is forecasted to decline from 58.7 to 58.3.
EURUSD Technical Analysis
The Euro was rejected multiple times around the 1.1510-1.1520 support area against the US Dollar. As a result, the EUR/USD pair bounced back sharply and traded above the 1.1600 resistance.
The 4-hours chart of EUR/USD indicates that the pair formed a solid support above 1.1510. It jumped higher and broke the 50% Fib retracement level of the last decline from the 1.1720 high to 1.1522 low.
More importantly, there was a break above a connecting bearish trend line with resistance at 1.1650 on the same chart. At the moment, the pair is trading near the 100 simple moving average (red, 4-hours) with positive signs.
It may perhaps continue to move higher towards the last swing high at 1.1720. Above this, the next stop for buyers could be the 1.236 Fib extension level of the last decline from the 1.1720 high to 1.1522 low at 1.1766.
On the other hand, if the pair corrects lower, it may well find support near the 1.1640 and 1.1600 support levels in the near term.
Recently in the Euro Zone, the CPI figure for June 2018 was released by the Eurostat. The market was looking for rise of 2% in the CPI in June 2018 compared with the same month a year ago.
The actual result was in line with the forecast with an increase of 2%, more than the last 1.9%. The report added that:
Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in June (8.0%, compared with 6.1% in May), followed by food, alcohol & tobacco (2.8%, compared with 2.5% in May), services (1.3%, compared with 1.6% in May) and non-energy industrial goods (0.4%, compared with 0.3% in May).
The Euro maintained a bid tone recently against the US Dollar. Having said that, the 1.1700 resistance must be breached sooner or later. If not, there is a risk of a downside reaction back towards 1.1600.
Economic Releases to Watch Today
- Euro Zone Unemployment Rate for May 2018 – Forecast 8.5%, versus 8.5% previous.
- Euro Zone PPI for May 2018 (YoY) – Forecast +2.4%, versus +2.0% previous.
- Germany’s Manufacturing PMI for June 2018 – Forecast 55.9, versus 55.9 previous.
- Euro Zone Manufacturing PMI June 2018 – Forecast 55.0, versus 55.0 previous.
- UK Manufacturing PMI for June 2018 – Forecast 53.5, versus 54.4 previous.
- US Manufacturing PMI for June 2018 – Forecast 55.0, versus 54.6 previous.
- US ISM Manufacturing PMI for June 2018 – Forecast 58.3, versus 58.7 previous.
