EUR/USD Forecast: Bulls Keep Buying On Dips

EUR/USD Current Price: 1.1341

• Equities retreated from their recent highs, but the dollar couldn’t benefit from the dismal mood.
• The U.S. Federal Reserve is expected to maintain its monetary policy unchanged, focus on the dot-plot.
• EUR/USD is nearing the multi-week high at 1.1384 posted after the upbeat US employment report.

The EUR/USD pair is nearing its post-NFP peak at 1.1383 ahead of the most relevant event of the week, the US Federal Reserve monetary policy decision. The greenback tried to recover some ground during European trading hours, helped by the sour tone of equities. Nevertheless and despite stocks were unable to recover, the dollar resumed its decline during the American session, ending the day lower against most of its major rivals.

In the data front, Germany published the April Trade Balance, which posted a surplus of €3.2B below expected, with exports falling by 24% and imports collapsing by 16.5%. The EU published the final version of the Q1 GDP, which was slightly better than initially estimated, printing at -3.6%, still indicating a steep contraction. The US published the NFIB Business Optimism Index, which came in at 94.4 in May, beating the market’s expectations, and the IBD/TIPP Economic Optimism for June, which slid from 49.7 to 49.

As said, the focus is now on the US Federal Reserve that will make its announcement this Wednesday. The central bank is not expected to announce any relevant change to the current policy but will publish the Summary of Economic Projections for the first time in six months. Forecasts on growth, inflation, and unemployment will provide hints on how policymakers see the possible economic recovery. The country will also publish May inflation data. The EU won’t publish macroeconomic figures ahead of the event.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair trades around 1.1340 after bottoming for the day at 1.1240. It briefly pierced the 23.6% retracement of its latest decline before turning north, a sign that buyers are still willing to buy the dips. The short-term picture is bullish, as, in the 4-hour chart, technical indicators have recovered above their midlines, the Momentum maintaining its bullish slope and the RSI consolidating around 66. The pair, in the meantime, has recovered above a bullish 20 SMA, currently at around 1.1300. An advance beyond 1.1380 should open doors for a test of the 1.1460 level, a long-term static resistance.

Support levels: 1.1300 1.1260 1.1220

Resistance levels: 1.1380 1.1420 1.1460