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EUR/USD Forecast: corrective bounce already losing steam, EZ GDP and US retail sales eyed

Written by By Haresh Menghani | 2018-05-15 05:23:56 GMT

The bullish momentum, however, fizzled out just ahead of the 1.20 hand and the pair finally ended the day in red, snapping two consecutive days of winning streak. A solid US Dollar turn around in the second half of Monday’s US trading session was seen as one of the key factors prompting some fresh selling at higher levels. Comments from Cleveland Federal Reserve President Loretta Mester, saying that the Fed might have to raise interest rates above 3% helped limit the greenback's early losses on Monday. This coupled with a strong pickup in the US Treasury bond yields, amid easing global trade tensions, further underpinned the buck and collaborated to the late upsurge. 

The pair extended overnight rejection slide and traded with a mild negative bias through the Asian session on Tuesday as investors now look forward to some important macro releases from the Euro-zone and the US. Today's economic docket features the release of German ZEW survey and the composite EZ Q1 GDP print, which along with the US monthly retail sales data could set the tone for the next leg of near-term direction for the major.

From a technical perspective, the pair’s inability to sustain above its immediate resistance, marked by 23.6% Fibonacci retracement level of the 1.2414-1.1823 recent decline, and rejection from a psychologically important level clearly seems to suggest that the near-term bearish trajectory might still be far from over. Hence, any fresh disappointment from the incoming EZ economic data will likely attract fresh selling around the shared currency and eventually pave the way for an extension of the pair’s downfall. 

A follow-through weakness below the 1.1900 handle now seems to accelerate the slide back towards 1.1850 horizontal level before the pair eventually heads towards testing the 1.1810-1.1800 support area. On the upside, any meaningful up-move back above the 1.1935-40 region might confront some fresh supply near the 1.1960 area, above which the pair could make a fresh attempt towards surpass the 1.20 round figure mark and test the very important 200-day SMA hurdle near the 1.2020 region.

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By Haresh Menghani
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