The EURUSD currency pair shed 40 basis points in Tuesday’s trading session following the U.S. printing green economic indicators supporting the Greenback.

The preliminary U.S. Global Composite PMI for May gained ground on the prior month and paced past the consensus of 50 to 54.5. In addition, New Home Sales for April grew 4.1%, well above expectations, suggesting that the U.S. economy, from manufacturing and services to consumption, remains resilient rather than depressed. Traders are developing a stronger belief in the possibility of a Fed rate hike up next, with the probability of a hike now up to 33.8% from 25.7% at the start of the week.

Technische Analyse

The Euro has been on the back foot as the Greenback has continued to outmanoeuvre the pair into a steeper downtrend, with the descending channel pattern stretching further and the moving average growing distant. Support and resistance were established at the 1.07122 and 1.08292 levels, respectively.

Midway through the support and resistance range, bulls found a platform at the 1.07600 level, where they dominate price action with jolts higher. A double bottom has now been established, and bulls have led the pair towards the descending channel pattern’s resistance.

If a high volume breakout above the descending channel pattern ensues, it could indicate that bullish momentum built up from the 1.07600 level is potentially discharging. Bulls will likely aim for the 1.08292 level if they sustain a move higher. Alternatively, a reversal from the descending channel resistance could occur if bears look to retest bulls. The 1.07600 level is likely a point of interest.

Zusammenfassung

The remainder of the week will have traders tilt to the U.S., with critical economic data upcoming. The FOMC Minutes will be unveiled today, while the Labour Market Reports and Core PCE Index loom. Traders will likely search for clues about where interest rates will go. The 1.07600 level will probably act as a pivot for market sentiment. If bearish sentiment abounds, a breakdown below the level could validate a weak appetite for the Euro.

Sources: CME FedWatch Tool, Markit Economics, Reuters, TradingView