EUR/USD Technical Analysis – May 20, 2024

EUR/USD Technical Analysis – May 20, 2024
EUR/USD Technical Analysis – May 20, 2024

The EUR/USD pair is edging higher toward 1.0900 early Monday, supported by a better market mood. This upward movement is also bolstered by a softer US Dollar and lower US Treasury bond yields as the market awaits Fedspeak amid light European trading.

Technical Indicators and Levels

Relative Strength Index (RSI):

  • The RSI declined on Thursday but stabilized above 60, suggesting the recent pullback was a technical correction rather than the beginning of a reversal.

Resistance Levels

  • 1.0890-1.0900 (Fibonacci 78.6% retracement, upper limit of ascending regression channel, psychological level):
    • This zone aligns as the first significant resistance. Breaking above this level could pave the way toward higher targets.
  • 1.0940 (Static Level):
    • The next resistance level if the pair successfully breaks above 1.0900.
  • 1.0980 (March 8 High):
    • A crucial resistance point before the psychological 1.1000 mark.

Support Levels

  • 1.0830-1.0820 (100-day SMA, mid-point of the channel):
    • This zone provides strong support and is crucial for maintaining the current bullish momentum.
  • 1.0790-1.0800 (50-day SMA, 200-day SMA):
    • Additional support levels reinforcing the bullish outlook if the pair retraces further.

Market Sentiment and Recent Developments

Following Wednesday’s upsurge, EUR/USD struggled to maintain its bullish momentum and closed modestly lower on Thursday. The pair remained relatively calm slightly above 1.0850 during the early European session on Friday.

The US Dollar staged a rebound on Thursday after the US Department of Labor reported 222,000 weekly Initial Jobless Claims for the week ending May 11, down from 232,000 the previous week. Additionally, cautious comments from Federal Reserve officials regarding policy easing helped the USD stay resilient against its major rivals.

Atlanta Fed President Raphael Bostic expressed satisfaction with April’s inflation progress but noted that it was not yet time to cut the policy rate. Cleveland Fed President Loretta Mester stated that monetary policy was well-positioned as they awaited more data. Richmond Fed President Thomas Barkin told CNBC that the latest Consumer Price Index (CPI) data indicated inflation was not yet at the Fed’s target.

The EUR/USD pair is currently navigating a critical juncture, with significant resistance levels around 1.0900 and strong support at 1.0830-1.0820. The pair’s ability to sustain its upward momentum will largely depend on market sentiment and forthcoming comments from Fed officials. Traders should keep a close eye on these technical levels and market developments to adjust their strategies accordingly. For continuous updates and detailed analysis, stay tuned to QuantumStrikes.com.

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