EUR/USD reaches 1.0765 four-week highs, but is unable to reach the 50-DMA and then retrace its steps to 1.0730s Details
Posted Sunday, May 29, 2022 1:40 (AM) by- Kevin Smith
EUR/USD reaches 1.0765 four-week highs, but is unable to reach the 50-DMA and then retrace its steps to 1.0730s

EUR/USD reaches 1.0765 four-week highs, but is unable to reach the 50-DMA and then retrace its steps to 1.0730s

  • The common currency is just about to end this week at 1.66 percent.
  • US Core PCE increased by 4.9 percent YoY, which is lower than March's 5.1 percentage reading. Will the Fed slow down the pace of rate increases?
  • USD/EUR Price Forecast: The longer-term trend is bearish, however an increase to 1.0800 in the near-term could be in the near future.

The EUR/USD climbed to a fresh four-week peak, which was around 1.0765 however, in the final hour, it sank by 30 pips in it slowed down as the New York session wanes, following a more positive trading session, thanks to favorable US data. At 1.0735 the EUR/USD could record monthly gains that reach 1.66 percent in the week filled with ECB officials' aggressive comments along with diverse US business data.

US inflation slows down a little while further ECB positive comments boost the EUR/USD

On Friday on Friday, The US Commerce Department unveiled inflation figures for the nation. The most widely used gauge of the Fed the Core PCE for April, grew by 4.9 percent YoY, which is in line with forecasts, however lower than the March figure. It eased investor concerns about the aggressiveness of the US central bank. a few among its staff members such as St. Louis Fed President James Bullard, expecting rates to be within the 3.25-3.50 percentage range.

In fact, in the week in Atlanta, Fed president Raphael Bostic, usually a “hawk,” said that after the Fed is finished with the 50bps of increases during the meeting in June and July the Fed could pause while they analyze the economy's response.

The EUR/USD was soaring on the news to 1.0750 however, it reversed the rise, dropping to 1.0700. But, towards between the North American session, the EUR/USD gained some ground, and remained above the lows set in April of 1.0727.

In the meantime, during the European session, Bundesbank president along with ECB members Joachim Nagel said that he believes the first rate increase will be announced in July, with additional increases to come in the second quarter of 2022. Nagel added that inflation could not be able to fall in a single day, and could take time.

The next week this week, next week, the Eurozone macroeconomic docket is scheduled to include headline Inflation for Germany as well as that of the Euro area. Both headline numbers are expected to hit new heights However, the the core EU inflation is expected to decrease to 3.4 percent. Another trigger for EUR/USD traders reactions could be that of the EU Council Meeting.

In the US front the docket will present data from the month of May, including ISM Manufacturing and business related PMIs, Fed speakers, and employment statistics in this US front.

EUR/USD Price Technical outlook: Forecast

The EUR/USD climbed during the course of the day, and broke through the moving average of 50 days (DMA) in the range of 1.0746 and advancing toward 1.0765 (new weekly record highs). The USD bulls' inability maintain the momentum brought prices down below the mentioned. But, they may be optimistic, given that their Relative Strength Index (RSI) is at 56 and remains in the bullish zone, and is aiming higher.

However, the first resistance in the EUR/USD is the 50-DMA. A break above would expose the March 7 low-turned-resistance at 1.0805, followed by April's 21 high at 1.0936.

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