Trading | 3 months ago
EUR/USD is nearly flat from last six days. Just last week EUR/USD has created a new five months high of 1.226 after the macroeconomic data reports released by major European countries signals a steady economic comeback. However, this week things have changed. Analysts expect a necessary price correction in EUR/USD before the next higher move.
According to the latest data reported by Destatis, Germany’s retail sales fell by 5.5% on monthly basis in April. This negative reading is seen as bearish for the EUR. As a result, EUR/USD has already given back some of the gains of the last month to turn things around. Currently the pair is trading near 1.219. By analyzing the weekly chart, we can confirm that this is an important resistance zone for EUR/USD. We may see some major pullback at this level.
Looking at the daily chart, we can see that EUR/USD rallied to create a double top. A double top indicates a strong bearish technical reversal pattern that forms after an asset reaches an important resistance level two consecutive times with a mild decline. However, EUR/USD Created only a small double top with 5 bars, so it is more likely a minor reversal than a major trend reversal.
Positive news is that preliminary Eurozone Purchasing Managers' Index (PMI) for May indicates a consistent growth. Inflation rate is also steady. COVID-19 cases across the Eurozone have been falling continuously. Above all, the mass vaccination program across France, Germany and UK is accelerating. The long-term technical outlook for EUR/USD is bullish. So, one must look for buying opportunities in EUR/USD.
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