Current trend

During the Asian session, the EUR/USD pair rose to 1.0740 against the US Fed’s decision on monetary policy and accelerating EU inflation.

In April, the preliminary EU consumer price index increased by 0.6% MoM and amounted to 2.4% YoY. The core rate reached 2.7% YoY, above the 2.6% forecast. If inflation pressures persist or intensify, European Central Bank (ECB) officials will have to keep the interest rates at 4.50% longer than expected. In addition, the preliminary EU gross domestic product (GDP) is at 0.3% QoQ, better than the forecast of 0.1%, and at 0.4% YoY, exceeding estimates of 0.2%, supporting the euro. Today, investors will focus on the EU March unemployment rate: according to preliminary estimates, it will remain at 6.5%.

The American dollar fell from 106.35 to 105.10 in USDX after the publication of the US Fed’s monetary policy decision and the subsequent press conference by the head of the regulator, Jerome Powell: the interest rate remained at 5.50%, and the official noted that progress in reducing inflation had slowed. In addition, it became known that the pace of quantitative easing would be reduced from 60.0B dollars to 25.0B dollars per month.

Traders wait for the publication of key macroeconomic statistics from the American labor market at 14:30 (GMT 2). According to preliminary estimates, in April, the national economy created 243.0K new jobs outside the agricultural sector after 303.0K previously. Average hourly wages may fall from 4.1% to 4.0%, and the unemployment rate may remain at 3.8%. At 15:45 (GMT 2), investors will pay attention to the S&P service PMI, which may stay at 50.9 points, and at 16:00 (GMT 2), to the Institute for Supply Management (ISM) service PMI, which may accelerate from 51.4 points to 52.0 points.

Support and resistance

The long-term trend is downward: after reaching the support level of 1.0613 in April, the price entered a correction, within which it tested the resistance level of 1.0740, where short positions with the target at the support level of 1.0613 became relevant. If 1.0740 is broken, the quotes may reach 1.0873.

The medium-term trend is downward but a correction is developing, within which the asset is approaching the trend border of 1.0785–1.0769, after the test of which short positions with the target in zone 2 (1.0645–1.0628) are relevant. After a consolidation above 1.0785, the trend will reverse upwards to the area of 1.0953–1.0937.

Resistance levels: 1.0740, 1.0873.

Support levels: 1.0613, 1.0460.

Trading tips

Short positions may be opened from 1.0740, with the target at 1.0613 and stop loss 1.0780. Implementation time: 9–12 days.

Long positions may be opened above 1.0780, with the target at 1.0873 and stop loss 1.0740.