The EUR/USD currency pair on Friday bounced off the trendline support to surge above 1.2183 after the latest round of US data. The currency pair continues to trade within a gently descending channel in the 60-min chart. This comes after this week’s bearish breakout from a triangle formation.
The latest rebound prevented the currency pair from falling to oversold levels of the 14-hour RSI. It is now pinned just a few levels below the 100-hour moving average.
EUR/USD Fundamentals Overview
From a fundamental perspective, the EUR/USD currency pair is trading at the back of a very busy week in both markets. On Friday, the US personal income for April beat the expected (MoM) change of -14.1% with a change of -13.1%. The core personal consumption price index also outshone the (YoY) expectation of 2.9% with 3.1%. The (MoM) equivalent matched the expectation of 0.6% while the Chicago purchasing managers’ index for May outperformed 68 with 75.2. The Michigan consumer sentiment index was in line with estimates at 82.9. Personal spending for April also matched 0.5%.
In the EU, the business climate for May improved to 1.5 compared to a previous reading of 1.12. Consumer confidence also came in better than the previous period’s -8.1 after matching the expectation of -5.1. But more importantly, the latest ECB speeches have pointed towards a potential tapering in the works. Reports emerged this week that the EU may be planning to reduce QE.
EUR/USD Technical Analysis (the 60-min Chart)
Technically, the EUR/USD currency pair appears to be trading within a descending channel formation in the 60-min chart. This comes at the back of a slightly ascending triangle formation. It shows a shift in the market sentiment from bullish to bearish.
The bulls will be targeting short-term rebound profits at around 1.2209 or higher at 1.2258. On the other hand, the bears will look to pounce on profits at around 1.2151 or lower at 1.2100.
EUR/USD Technical Analysis (the Daily Chart)
In the daily chart, the EUR/USD currency pair appears to be trading within an ascending channel formation. The pair continues to trade very close to the overbought levels of the 14-day RSI. This indicates a significant long-term bearish bias in the market sentiment.
The bulls will be targeting long-term profits at around 1.2346 or higher at 1.2488. On the other hand, the bears will look to pounce for profits at around 1.2022 or lower at 1.1859.