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EUR/USD Forecast: Technical Breakout Supports A Continued Advance Heading Into The Weekend

Valeria Bednarik - Chief Analyst at FXStreet
·2 min read

EUR/USD Current Price: 1.1091

  • Total US unemployment claims since mid-March surpassed 40 million.

  • Hopes on economic recoveries an EU’s aid fund kept the mood upbeat.

  • EUR/USD technical breakout supports a continued advance heading into the weekend.

The EUR/USD pair surged to a fresh 2-month high of 1.1093 this Thursday, retaining its bullish stance as the US session comes to an end. Inventors welcome the European Commission proposed aid stimulus program, and took with a pitch of salt dismal data from both shores of the Atlantic, largely anticipated due to the lockdowns that took place in Europe and the US.

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Worth mention that the US economic contraction in the US was worse than anticipated according to the second reading of Q1 GDP, which was revised to -0.5%. Also, something to highlight, Initial Jobless Claims in the US increased by 2.12 million in the week ending May 22, bringing the total number of claims since mid-March to above 40million. Continuing claims, however, fell by almost 4 million to 21 million, an encouraging sign. Equities rallied, keeping the greenback under pressure.

This Friday, Germany will publish April Retail Sales, expected to have fallen by 12% in the month, and by 12.3% when compared to a year earlier. The EU will unveil the preliminary estimate of its May inflation, seen at 0.2% YoY, while the US will publish April Personal Income and Personal Spending data, alongside core PCE inflation, foreseen at 1.1% from 1.7% in March.

EUR/USD short-term technical outlook

The EUR/USD pair has kept rallying after the bullish breakout despite no apparent catalyst during US trading hours. At the time being, holds on to intraday gains near the 1.1100 level. The 4-hour chart shows that the pair has run well above a bullish 20 SMA, which accelerated north far above the larger ones. Technical indicators have lost their bullish strength within overbought levels, although with the price pressuring the daily high, the risk remains skewed to the upside. The main resistance now is 1.1120, a strong static level above which, large stops are to be expected.

Support levels: 1.1040 1.0995 1.0950

Resistance levels: 1.1120 1.1150 1.1190

View Live Chart for the EUR/USD

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