The EUR/USD ended last week and started this week retreating. However after yesterday’s lackluster FOMC minutes, the EUR/USD found support and is attempting a price bottom. Let’s take a look at today’s (5/21) fundamental factors and technical developments.
German Flash Manufacturing PMI (May): 51.4
German Flash Services PMI (May): 52.9
EU Flash Manufacturing PMI (May): 52.3
EU Flash Services PMI (May): 53.3
Overall, the manufacturing and services sectors continued to expand but at a slower pace in May vs. April. While the data points were weaker than expected, they do not constitute a trend. In fact, the last couple of months have been shown improvements.
On another front, the ECB released its accounts of its May monetary policy meeting. There was nothing surprising here. (Official ECB Release). The ECB sees positive results and wants to maintain pace on its current stimulus measures.
Today’s fundamentals appear to be neutral to bearish for the Euro.
US Jobless Claims: 274K
Flash Manufacturing PMI (May): 53.8
Existing Home Sales (April): 5.04M
Philly Fed Manufacturing Index (May): 6.7
US data failed to impress as well. But even though jobless claims data missed forecast, it is still in a good trend. Manufacturing is growing slower in May, at a 16-month low pace. Still, this does not represent a trend.
The fundamentals on both sides of the pond do not give the market anything in the near-term to go on. So let’s take a look at the medium-term outlook:
The 4H chart shows a market in consolidation or bearish correction against a sharp rally from 1.0520 to 1.1466. After a retreat to 1.1062, EUR/USD still looks bullish in the 4H chart as it holds above the 200-period SMA and a rising trendline. It seems like a return above 1.13 would revive the prevailing uptrend, or at least put pressure on the 1.1466 high with risk of pushing to 1.15.
To the downside, it will likely take a break below 1.10 to open up the bearish outlook back towards the 1.0520 April-low and the 1.0462 low on the year.
Previous Post by Author: AUD/NZD Maintains Bullish Bias Above 1.07