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EUR/USD Correcting Gains, Dips Remain Supported

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Aayush Jindal

Key Highlights

  • The Euro gained momentum and traded towards1.1420 against the US Dollar.
  • EUR/USD is correcting gains, but remains wellsupported above 1.1300.
  • The US Personal Income in May 2019 increased 0.5%(MoM), more than the +0.3% forecast.
  • The US ISM Manufacturing Index in June 2019could decline from 52.1 to 51.0.

EURUSD Technical Analysis

This past week, there was a strong rise in the Euro above 1.1300 against the US Dollar. The EUR/USD pair climbed above the 1.1340 resistance and even spiked above the 1.1400 level.

EURUSD Technical Analysis Euro US Dollar

Looking at the 4-hours chart, the pair formed a new swinghigh near 1.1412 before it started a downside correction. It traded below the1.1380 level and the 23.6% Fib retracement level of the upward move from the1.1182 low to 1.1412 high.

On the downside, there are many supports near the 1.1340,1.1320 and 1.1300 levels. The main support is near the 1.1300 level and the 100simple moving average (red, 4-hours).

Besides, the 50% Fib retracement level of the upward movefrom the 1.1182 low to 1.1412 high is also near the 1.1296 level to act as adecent support. If there are more downsides, EUR/USD could even test the 1.1260support area.

On the upside, the 1.1400 and 1.1410 levels are initialresistances. A break above the 1.1412 swing high might set the pace for moregains above the 1.1440 level.

Fundamentally, the US Personal Income report for May 2019was released by the Bureau of Economic Analysis, Department of Commerce. Themarket was looking for a 0.3% rise in the personal income compared with theprevious month.

The actual result was better than the forecast, as the USPersonal Income increased 0.5% in May 2019, similar to the last reading. Lookingat the Personal Spending, there was a drop from the last revised reading of0.6% to 0.4% (similar to the forecast).

The report added:

Personal incomeincreased $88.6 billion (0.5 percent) in May according to estimates released today by the Bureau of Economic Analysis. Disposable personal income(DPI) increased $72.6 billion (0.5 percent) and personal consumption expenditures(PCE) increased $59.7 billion (0.4 percent).

Overall, EUR/USD seems to be correcting gains, but it remains well supported near 1.1340 and 1.1300. Similarly, GBP/USD might continue to find bids near the 1.2650 support.

Economic Releases to Watch Today

  • Germany’s Manufacturing PMI for June 2019 -Forecast 45.4, versus 45.4 previous.
  • Euro Zone Manufacturing PMI June 2019 – Forecast47.8, versus 47.8 previous.
  • UK Manufacturing PMI for June 2019 – Forecast 49.2,versus 49.4 previous.
  • US Manufacturing PMI for June 2019 – Forecast 50.1,versus 50.1 previous.
  • US ISM Manufacturing Index for June 2019 –Forecast 51.0, versus 52.1 previous.
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