EUR/USD Forecast: Bulls timidly adding, aim for 1.0900

EUR/USD Current price: 1.0789

• Better than anticipated, Eurozone Composite PMIs underpin the Euro.
• The United States calendar will bring a couple of Federal Reserve speakers.
• EUR/USD is bullish in the near term and poised to run past 1.0811, Friday’s high.

The EUR/USD pair posts modest gains on Monday, trading in the 1.0780 price zone ahead of Wall Street’s opening. A better market mood weighs on the US Dollar’s demand while encouraging Eurozone data underpins the Euro. At the same time, holidays in Japan and the United Kingdom (UK) limit intraday activity.

The euro area’s economic recovery progressed further at the start of the second quarter, according to the latest Hamburg Commercial Bank (HCOB) PMI survey. The EU Services PMI was confirmed at 53.3 in April, up from a preliminary estimate of 52.9. The Composite PMI hit 51.7 in the same month, the highest in eleven months. On a negative note, the report also signalled stronger inflationary pressures across the Union in April. Nevertheless, the indexes in major European economies came above 50, the threshold separating economic expansion from contraction.

The Eurozone published the March Producer Price Index, which contracted 0.4% MoM and 7.8% YoY and May Sentix Investor Confidence, which improved to -3.6 from -5.9 in April. The United States (US) macroeconomic calendar includes a couple of Federal Reserve (Fed) speakers and short-term bill auctions.

EUR/USD short-term technical outlook

From a technical point of view, EUR/USD is bullish. The daily chart shows it further advanced beyond a bearish 20 Simple Moving Average (SMA), while a directionless 200 SMA provides dynamic resistance at around 1.0800. At the same time, technical indicators advance within positive levels with a modest bullish momentum but are still heading north.

Near-term technical readings also support a bullish extension. The EUR/USD pair trades above all its moving averages, while the 20 SMA gains upward traction above a flat 100 SMA. The 200 SMA, in the meantime, provides near-term support at around 1.0750. Finally, technical indicators resumed their advances above their midlines after correcting overbought conditions. The pair hit 1.0811 on Friday, the level to beat for another leg north towards the 1.0900 price zone.

Support levels: 1.0750 1.0700 1.0695    

Resistance levels: 1.0810 1.0840 1.0885