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EUR/USD Back Below $1.22 but Tone Remains Buoyant

EUR
MNI (London)
  • Friday's release of Germany flash Mfg PMI, missing forecast level, failed to provide the necessary upside impetus to take on the resistance area between $1.2240/50.
  • The corrective pullback was given weight by dovish comments from ECB Lagarde (closely watching recent yield increases) , as well as release of stronger than forecast US PMI data, which took rate toward Wednesday's low of $1.2160, finding a base at $1.2161 before edging back to $1.2188 into the close.
  • Position adjustments were also in play ahead of the weekend, with some major Europe centres closed today for Whitsun.
  • Trade in Asia saw rate consolidate between $1.2173/87
  • Support remains at $1.2160/50, ahead of $1.2126(May17 low, 61.8% 1.2052-1.2245) then $1.2100($1.2098 76.4% 1.2052-1.2245)
  • Resistance seen into $1.2200 ahead of $1.2210/20, a break to expose the $1.2240/50 area again ($1.2250 barrier?). Break here brings $1.2280/85 into play.
  • Month end approaching, US holiday May31 so end month value (May28) will be traded Wednesday (possible US corporate USD demand).
  • Chicago Fed Activity Index 1230GMT ahead of Fed Brainard(dove) 1300GMT, Fed Mester(non-voter, hawk), Fed Bostic(hawk) 1600GMT, Fed Georg non-voter, hawk) 2130GMT.
  • MNI Techs: Outlook remains bullish following last week's gains and high print of 1.2245. Clearance of this level would confirm a resumption of strength and open 1.2285, Jan 8 high. On the downside, key short-term support has been defined at 1.2052, May 13 low while initial support is at 1.2126, the May 17 low. A break of 1.2052 would signal a top.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
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MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange BulletsHomepage

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