by FXOpen on May 24th, 2019

EUR/USD outlook: the pair is currently forming a bullish continuation pattern

The EUR/USD pair is going higher this morning, rising above the level of 1.1180. The US Dollar showed slight losses, falling from two-year highs amid falling yields on US government bonds, as investors fear that the trade dispute between China and the US will damage the US economy more than previously thought.

Another factor holding back the growth of the US Dollar was the growing expectations that the Fed will cut interest rates at the end of this year in order to support the world’s largest economy. The yield on 10-year US Treasury bonds rose slightly, but on Thursday it fell to its lowest level since October 2017 after data on manufacturing activity in the USA for May showed the weakest growth rates in almost a decade.

The Euro is expected to remain volatile due to ongoing European parliamentary elections. It is expected that data on orders for durable goods in the US for April will be published at 13:30 GMT.

EUR/USD technical analysis

The Euro declined heavily below the 1.1150 support area against the US Dollar. However, the EUR/USD pair found a strong support near the 1.1107 level and recently bounced back sharply.

The pair surged above the 1.1150 level and the 50 hourly simple moving average. It even cleared the 1.1180 level and traded as high as 1.1187. The pair is currently forming a bullish continuation pattern with resistance near the 1.1185 level.

If there is an upside break above the 1.1185 and 1.1190 levels, EUR/USD could continue higher towards the 1.1200 and 1.1220 levels.

Conversely, if there is a downside break, the pair might correct towards the 1.1155 support area. The 50 hourly SMA and the 38.2% Fib retracement level of the recent rally from the 1.1107 low to 1.1187 high are likely to act as a strong buy zone.

By FXOpen

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