EURUSD: Euro Corrects After Rallying To 1.2150

The EURUSD pair surged 0.29% to 1.2125 on Wednesday, April 28. The euro opened the trading session sluggishly, but a rebound from 1.2056 gave the bulls a shot in the arm. The active phase of euro gains got under way during Powell's speech.

As for the FOMC meeting, the regulator left interest rates and stimulus volumes unchanged. Fed Chair Jerome Powell said that the economic recovery is still a work in progress and far from over, so it is still too soon for taper talk.

The Federal Reserve intends to tap its full range of instruments to support the US economy, helping to achieve its goals of maximum employment and price stability.

Todays macro agenda (GMT+3)

  • 10:55 Germany: unemployment rate and number of unemployed (April)
  • 12:00 EU: economic sentiment and consumer confidence (April) 
  • 15:00 Germany: CPI (April)
  • 15:30 US: GDP (Q1) and initial weekly jobless claims
  • 17:00 US: pending home sales (March)

1

Current outlook

EURUSD pair rose to 1.2150 in Asian trading. Dollar weakness was likely due to Joe Biden's remarks in his address before a joint meeting of Congress.

At the time of writing, the euro was trading at 1.2117. The correction was apparently triggered by a widening of the 10-year UST yield to 1.643% from 1.608%, as well as a decline in the USDGBP cross. The cross reached the 0.8676 key support level.

Major currencies are trading in positive territory, except for the Japanese yen and the Swiss franc. The leader board is topped by sterling (+0.24%).

Today we would like to highlight support at 1.2094 (4). The correction amounted to 38.25% of the increase from 1.2056 to 1.2150. Although the cross puts pressure on buyers, they still look set to move higher. Key resistance is at 1.2150 (2). It formed from the 1.2080 and 1.2117 tops. If euro selling in crosses comes to a halt, the euro can be expected to recover.

A volatility surge is expected during the North American session after a string of US macro data comes out. Speculators will focus on the Q1 US GDP report. In line with the average consensus, GDP is expected to grow from 4.3% to 6.1% QoQ.

Disclaimer: Forecasts which are made in the review constitute the personal view of the author. Commentaries made do not constitute trade recommendations or guidance for working on financial ...

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