Forecast for EUR/USD on May 24, 2019
May 24, 2019 5:21 amVideo
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EUR/USD
On Thursday morning, the euro was under pressure due to weak eurozone PMIs in May; business activity in the services sector decreased from 52.8 to 52.5, there was a drop in the manufacturing sector from 47.9 to 47.7. The euro lost almost 50 points, as was the information about the US intention to impose sanctions against the Chinese company Hikvision (video surveillance systems). The news brought down the US stock market (S&P 500 – 1.19%), sharply increased the demand for such defensive assets like government bonds and gold. European investors, as it happened before, began to withdraw investment from the yuan by the “Chinese fears”, the EUR/CNY pair rose from 7.70 to 7.73, which affected the growth of the euro against the dollar. At the same time, data on the sales of new homes for the US in April was worse than the forecast: 673 thousand versus 678 thousand, while March volume was 723 thousand (however, revised to increase from 692 thousand). In the end, the euro grew by 30 points.
The situation is undoubtedly temporary. In case of its development in a deteriorating track (US-China relations), investors will again prefer to buy a defensive currency – the dollar. The nearest, and more pressing issue is the resignation of British Prime Minister Theresa May and the UK’s exit from the EU without a deal. Against the background of these expectations, the growth of counter-dollar currencies for any reason seems to be limited.
The Fibonacci 100.0% on the daily chart (1.1214) is technically a strong resistance for the euro. The price is still below the balance and MACD lines on the daily and Marlin oscillator keeps the border with the growth area from growing, which can cause a price reversal even from the current levels, but on the four-hour chart the price has consolidated above the MACD line and can go higher. The expectations of US macroeconomic indicators today are also not in favor of the dollar – the volume of orders for durable goods in April could show a decline of -2.0%.
In general, the euro has a convenient position to maintain neutrality, because on Monday the results of the European Parliament elections will be known. A slight increase in the euro may even be due to the closure of short positions of those players who did not have time to do it yesterday.
The material has been provided by InstaForex Company – www.instaforex.com
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