Published on May 18, 2023

Daily Analysis For EUR/USD 18-05-2023

EUR/USD Analysis

Economic Events and Scenario for EUR/USD

Economic Events: -

GMT	Event	Impact	Currency
00:50	(Japan) Foreign Bond Investment	Low	JPY
00:50	(Japan) Stock Investment by Foreigners	Low	JPY
00:50	(Japan) Imports YoY	Low	JPY
00:50	(Japan) Exports YoY	Medium	JPY
00:50	(Japan) Balance of Trade	High	JPY
01:00	(Austria) Ascension Day	None	EUR
01:00	(Belgium) Ascension Day	None	EUR
01:00	(Euro Area) Ascension Day	None	EUR
01:00	(Finland) Ascension Day	None	EUR
01:00	(France) Ascension Day	None	EUR
01:00	(Germany) Ascension Day	None	EUR
01:00	(Luxembourg) Ascension Day	None	EUR
01:00	(Netherlands) Ascension Day	None	EUR
01:00	(Switzerland) Ascension Day	None	CHF
02:30	(Australia) Part Time Employment Chg	Medium	AUD
02:30	(Australia) Participation Rate	Low	AUD
02:30	(Australia) Full Time Employment Chg	Medium	AUD
02:30	(Australia) Unemployment Rate	High	AUD
02:30	(Australia) Employment Change	High	AUD
04:00	(East Timor) Inflation Rate YoY	Low	USD
04:00	(East Timor) Inflation Rate MoM	Low	USD
04:35	(Japan) 52-Week Bill Auction	Low	JPY
07:30	(Euro Area) ECB Guindos Speech	High	EUR
09:00	(Spain) Balance of Trade	Medium	EUR
09:40	(Spain) Obligacion Auction	Low	EUR
09:40	(Spain) 5-Year Bonos Auction	Low	EUR
10:00	(Euro Area) ECB President Lagarde Speech	Medium	EUR
11:00	(Portugal) PPI MoM	Low	EUR
11:00	(Portugal) PPI YoY	Low	EUR
11:00	(Slovakia) Unemployment Rate	Low	EUR
11:30	(Portugal) Private Consumption YoY	Low	EUR
11:30	(Portugal) Economic Activity YoY	Low	EUR
13:30	(United States) Philadelphia Fed Manufacturing Index	Medium	USD
13:30	(United States) Philly Fed Business Conditions	Low	USD
13:30	(United States) Philly Fed CAPEX Index	Low	USD
13:30	(United States) Philly Fed Employment	Low	USD
13:30	(United States) Philly Fed New Orders	Low	USD
13:30	(United States) Philly Fed Prices Paid	Low	USD
13:30	(United States) Initial Jobless Claims	High	USD
13:30	(United States) Jobless Claims 4-week Average	High	USD
13:30	(United States) Continuing Jobless Claims	High	USD
13:30	(Canada) New Housing Price Index YoY	Medium	CAD
13:30	(Canada) New Housing Price Index MoM	Medium	CAD
14:05	(United States) Fed Jefferson Speech	Medium	USD
14:30	(United States) Fed Barr Testimony	Medium	USD
15:00	(United States) Existing Home Sales MoM	High	USD
15:00	(United States) Existing Home Sales	High	USD
15:00	(United States) CB Leading Index MoM	Low	USD
15:00	(United States) Fed Logan Speech	Medium	USD
15:30	(United States) EIA Natural Gas Stocks Change	Low	USD
16:30	(United States) 8-Week Bill Auction	Low	USD
16:30	(United States) 4-Week Bill Auction	Low	USD
18:00	(United States) 10-Year TIPS Auction	Low	USD
20:00	(El Salvador) Balance of Trade	Low	USD
23:45	(New Zealand) Balance of Trade	Medium	NZD
23:45	(New Zealand) Exports	Low	NZD
23:45	(New Zealand) Imports	Low	NZD

Today's Scenario: - The EUR/USD pair has experienced a slight recovery from its immediate support level of 1.0835 during the Asian trading session. This major currency pair is expected to gain further momentum as the US Dollar Index (DXY) has pulled back below 102.90 after a brief rebound.

During the Asian session, S&P500 futures recorded marginal losses, indicating a mild sense of caution in the overall market sentiment favoring riskier assets. On Wednesday, US equities witnessed significant buying activity, driven by President Joe Biden's confidence in raising the US debt ceiling. However, this approval is accompanied by a compromise that will result in a higher budget deficit.

Buy Scenario: - The EUR/USD pair is hovering around 1.0840 as the previous day's temporary recovery from a 1.5-month low diminishes in the early hours of Thursday.

Although the Euro pair managed to rebound from the 1.0800 level on Wednesday, supported by the downbeat RSI (14) conditions and the 100-day moving average (DMA), its upward momentum is restrained by a bearish MACD signal and cautious market sentiment ahead of a speech by European Central Bank (ECB) President Christine Lagarde. Additionally, concerns about a potential US default limit the buying interest in the pair.

Therefore, the recovery of the EUR/USD requires confirmation, with the 50-DMA and the support-turned-resistance line, which dates back to September 2022 and is located near 1.0900 at the moment, serving as a key level for further advances.

If the pair manages to surpass this level, it may face resistance near the early May low around 1.0940 and the February high around 1.1035, posing challenges for buyers. Moreover, multiple tops observed in April and May around 1.1090 and 1.1100 can also act as upside barriers, till we do not advise to buy EUR/USD currency pair.

Sell Scenario: - On the downside, a daily close below the 100-DMA near 1.0800 would attract sellers in the EUR/USD pair. In such a scenario, the 23.6% Fibonacci retracement level of the pair's upward movement from September 2022 to April 2023, around 1.0725, could serve as an additional support.

It is important to note that a broad support zone encompassing various levels marked since November 2022, roughly between 1.0520 and 1.0480, presents a formidable obstacle for EUR/USD sellers.

To summarize, despite the recent corrective bounce, the EUR/USD pair is expected to maintain a bearish bias. Till then we do not advise selling EUR/USD.

Support and Resistance Level: -