Key Highlights
- EUR/USD traded as high as 1.1007 before starting a downside correction.
- A major bullish trend line is forming with support near 1.0865 on the 4-hours chart.
- The German GDP is likely to decline 2.2% in Q1 2020 (QoQ).
- The German IFO Business Climate Index could improve from 74.3 to 78.8 in May 2020.
EUR/USD Technical Analysis
This past week, the Euro started a steady recovery above the 1.0900 resistance against the US Dollar. EUR/USD tested the 1.1000 resistance zone before starting a fresh decline.
Looking at the 4-hours chart, the pair traded as high as 1.1007 before it declined below 1.0950. There was a break below the 38.2% Fib retracement level of the upward move from the 1.0774 low to 1.1007 high.
However, the pair is now approaching a major support zone near 1.0880 and 1.0860. The 50% Fib retracement level of the upward move from the 1.0774 low to 1.1007 high is also at 1.0890.
More importantly, there is a major bullish trend line forming with support near 1.0865. The trend line is close to the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).
If the pair fails to stay above 1.0880 and 1.0860, it could continue to move down. The next major support is near the 1.0800 level.
Conversely, EUR/USD could start a fresh increase above the 1.0940 and 1.0950 resistance levels. The main resistance on the upside above 1.0950 is near the 1.1000-1.1020 zone.
Looking at GBP/USD, the pair is showing bearish signs below the 1.2250 pivot level. Besides, USD/JPY is struggling to clear the 108.00 resistance zone.
Upcoming Economic Releases
- German Gross Domestic Product for Q1 2020 (YoY) – Forecast 0.3%, versus -1.9% previous.
- German Gross Domestic Product for Q1 2020 (QoQ) – Forecast -2.2%, versus -2.2% previous.
- German IFO Business Climate Index for May 2020 – Forecast 78.8, versus 74.3 previous.
