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EUR/USD Sighting Larger Recovery Above 1.1280

Key Highlights

  • The Euro found support near 1.1175 and correctedhigher against the US Dollar.
  • A major bullish trend line is forming withsupport at 1.1195 on the 4-hours chart of EUR/USD.
  • The US CPI in April 2019 increased 2.0% (YoY),less than the +2.1% forecast.
  • Canada’s unemployment rate declined from 5.8% to5.7% in April 2019.

EURUSD Technical Analysis

After trading as low as 1.1135, the Euro started a steady rebound against the US Dollar. The EUR/USD pair broke the 1.1175 and 1.1200 resistance levels to move into a short term positive trend.

EURUSD Technical Analysis Euro US Dollar

Looking at the 4-hours chart, the pair formed a strongsupport near the 1.1175 and 1.1180 levels. As a result, there was an upsidebreak above the 1.1215 resistance, plus the 50% Fib retracement level of themajor drop from the 1.1264 high to 1.1135 low.

The pair settled above the 1.1200 level and the 100 simplemoving average (4-hours, red). It opened the doors for more gains above the1.1230 level and the 61.8% Fib retracement level of the major drop from the1.1264 high to 1.1135 low.

On the upside, the main resistance is near the 1.1260 and1.1265 levels. If there is an upside break above the 1.1264 swing high, thereare chances of a larger recovery towards the 1.1280, 1.1300 and 1.1320 levels.

On the downside, there is a strong support forming near the1.1200 level. There is also a major bullish trend line in place with support at1.1195 on the same chart. If there is a daily close below the trend line and1.1180 support, the pair could move back in a bearish zone.

Fundamentally, the US Consumer Price Index for April 2019was released by the US Bureau of Labor Statistics. The market was looking for a2.1% rise in the CPI, compared with the same month a year ago.

However, the actual result was below the forecast, as the UP CPI increased 2.0%, but it was above the last 1.9%. Looking at the monthly change, it came in at 0.3%, down from the last 0.4%.

US CPI April 2019

The report added:

The index for all items less food and energy increased 0.1 percent for the third consecutive month. The indexes for shelter, medical care, education, and new vehicles all rose in April. The indexes for used cars and trucks, apparel, and household furnishings and operations were among those that declined over the month.

Overall, EUR/USD could continue to recover in the short term, but pairs like AUD/USD and GBP/USD declined below key support levels recently and are trading in a bearish zone.

Economic Releases to Watch Today

  • Japan’s Trade Balance March 2019 - Forecast ¥317.3B,versus ¥489.2B previous.
  • Japan’s Current Account March 2019 - Forecast ¥2,679.0B,versus ¥2,676.0B previous.