LiteForex analitics. EUR/USD: the euro is recovering
Current trend
EUR grew against USD on Friday, having regained some of its losses. Active sales of EUR were due to the market reaction to the ECB meeting outcome.
The member of the board of ECB governors and the head of the Bank of Austria Ewald Novotny tried to calm down the investors. He noted that inflation is very close to the target level of 2.0% and the ECB is embarking on a process of monetary policy normalizing. However, their actions will not be sharp and will take a significant amount of time.
Published on Friday, the final May inflation data did not change. Consumer Price index remained unchanged at the level of 1.9%. On the one hand, high inflation indicators will push the European regulator to a gradual cancellation of monetary incentives. On the other hand, according to Mario Draghi, the ECB does not take into account the risks associated with the introduction of the US trade duties on metals produced in the EU. If the situation worsens, monetary policy tightening may be postponed.
Support and resistance
Bollinger Bands in D1 chart demonstrate flat dynamics. The price range widens but not enough for "bearish" trend to develop. MACD declines keeping a sell signal (located below the signal line). Stochastic declines locating close to its minimum levels, indicating oversold EUR.
Technical indicators don’t contradict "bearish" trend development but corrective growth is possible.
Resistance levels: 1.1625, 1.1659, 1.1688, 1.1711.
Support levels: 1.1572, 1.1541, 1.1508.
Trading tips
To open long positions, one can rely on the rebound from the support level of 1.1572, with the breakout of 1.1600. Take-profit — 1.1688, 1.1711. Stop-loss — 1.1550.
A breakdown of 1.1572 may be a signal to sell with targets at 1.1508, 1.1500 or 1.1475. Stop-loss — 1.1625.
Implementation period: 2-3 days.
