The US dollar has been trading within tight ranges recently, impacted by a lack of fresh catalysts and a holiday across most of mainland Europe. With no major US data releases scheduled for today, market participants are closely monitoring Federal Reserve communications, which could influence the dollar’s trajectory.
Despite the Fed’s hawkish tone—arguing against premature rate cuts—the greenback has only found mild support. Softer-than-expected US data, including jobs figures, PMIs, retail sales, building permits, housing starts, and even slightly cooler inflation data, have tempered bullish sentiment. This trend suggests that while the Fed is cautious about inflation, the economic landscape may not justify a prolonged bullish outlook for the dollar.
Global PMIs and Core PCE Among Major Macro Highlights Still to Come in May
The focus for EUR/USD traders this week will be on global PMI data, particularly from the Eurozone, and the US core PCE figures set to be released at the end of the month. The upcoming PMI data from the Eurozone and the UK will
-year trend of sub-50 readings. Any positive shift here, even a slower contraction, could bolster the euro against the dollar.
EUR/USD Technical Analysis Points Higher
The EUR/USD pair is currently consolidating within a bull flag continuation pattern, indicative of potential bullish momentum. Following a 1% rise last week, the pair has been in a holding pattern amid a dearth of major macro catalysts. However, the recent price action suggests bullish sentiment may prevail as the week progresses.
Technical Levels to Watch:
- Support: 1.0850 (short-term), 1.0825, and 1.0800
- Resistance: 1.0885 (April high), 1.0981 (March high), and the psychological level of 1.10
A break above the short-term resistance at 1.0885 could pave the way for a run towards 1.0981, and potentially 1.10. If the EUR/USD breaches these levels, it would signal a strong bullish continuation.
Conclusion and Clear Buy Signal
The technical and fundamental analysis both point towards a bullish short-term outlook for EUR/USD. With the dollar finding only mild support from hawkish Fed rhetoric and US economic data showing signs of weakness, the euro is positioned to gain. The focus on upcoming global PMI and US core PCE data will be crucial, but the current technical setup favors further EUR/USD upside.
Buy Signal: Traders should watch for a breakout above 1.0885 as a signal to enter long positions, targeting 1.0981 and 1.10 subsequently. This breakout would confirm the bullish continuation pattern and suggest further strength in the euro against the dollar.