EUR/USD Signaling Positive Bias Above 1.0920
- EUR/USD started a strong recovery above the 1.0900 and 1.0920 resistance levels.
- It surpassed a major bearish trend line at 1.0932 on the 4-hours chart.
- The US ISM Manufacturing Index declined from 49.1 to 41.5 in April 2020.
- The Euro Zone Manufacturing PMI is likely to remain at 33.6 in April 2020.
EUR/USD Technical Analysis
After trading as low as 1.0727, the Euro started a strong recovery against the US Dollar. EUR/USD climbed above the 1.0850 and 1.0900 resistance levels to move into a positive zone.
Looking at the 4-hours chart, the pair even surpassed the 1.0920 resistance and settled above both the 200 simple moving average (green, 4-hours) and the 100 simple moving average (red, 4-hours).
During the rise, the pair climbed above a major bearish trend line at 1.0932. It even spiked above the 1.0990 swing high and 1.1000. On the upside, the next resistance is near the 1.1050 level.
The 1.236 Fib extension level of the key decline from the 1.0990 high to 1.0727 low is also near 1.1053 level. Any further gains could lead the pair towards the 1.1100 and 1.1120 resistance levels.
Conversely, there could be a downside correction towards the 1.0930 and 1.0920 levels. The main support is now forming near the 1.0880 level and the 100 simple moving average (red, 4-hours), below which EUR/USD could resume its downtrend.
Fundamentally, the US ISM Manufacturing Index for April 2020 was released this past Friday by the Institute for Supply Management (ISM). The market was looking for a decline in the index from 49.1 to 36.9.
The actual result was better than the forecast, as the US ISM Manufacturing Index declined from 49.1 to 41.5 in April 2020.
The report added:
New Orders Index registered 27.1 percent, a decrease of 15.1 percentage points from the March reading of 42.2 percent. The Production Index registered 27.5 percent, down 20.2 percentage points compared to the March reading of 47.7 percent.
Overall, EUR/USD could continue to recover as long as it is above 1.0920 and 1.0880. Looking at USD/JPY, the pair is facing a lot of hurdles near 107.40 and 107.50
Upcoming Economic Releases
- Germany’s Manufacturing PMI for April 2020 - Forecast 34.4, versus 34.4 previous.
- Euro Zone Manufacturing PMI April 2020 – Forecast 33.6, versus 33.6 previous.