Current trend

During morning trading, the EUR/USD pair is correcting at 1.0655, despite positive macroeconomic EU statistics.

Yesterday, most EU countries published Q1 data on gross domestic product (GDP): the figure in France adjusted by 0.2% and from 0.8% to 1.1% on a quarterly and annual basis, respectively, in Spain – by 0.7% and from 2.1% to 2.4%, and in Italy – by 0.3% and from 0.7% to 0.6%. The German economy entered the positive zone, adding 0.2% QoQ after –0.5% earlier but remained in the negative zone at –0.2% YoY. Thus, EU GDP moved from –0.1% to 0.3% QoQ and from 0.1% to 0.4% YoY, respectively. The dynamics of indicators allow officials of the European Central Bank (ECB) to begin lowering interest rates. Thus, yesterday, the head of the Central Bank of the Netherlands, Klaas Knot, said that the disinflation process continues, which makes the June reduction in borrowing costs realistic but the regulator’s further steps should not be hasty.

Meanwhile, the American dollar reached 106.20 in USDX amid expectations of the outcome of today’s US Fed monetary policy meeting. Although the probability of interest rates remaining at 5.25–5.50%, according to the Chicago Mercantile Exchange (CME) FedWatch Instrument, is 98.4%, investors are hoping to hear from agency representatives’ comments on the timing of the transition to “dovish” course.

Support and resistance

On the daily chart, the trading instrument is correcting, declining within a downward channel with dynamic boundaries of 1.0860–1.0560.

Technical indicators strengthen the sell signal: fast EMA on the Alligator indicator move away from the signal line, expanding the range of fluctuations, and the AO histogram forms downward bars, falling in the sales zone.

Resistance levels: 1.0710, 1.0810.

Support levels: 1.0620, 1.0500.

Trading tips

Short positions may be opened after the price declines and consolidates below 1.0620, with the target at 1.0500. Stop loss is 1.0700. Implementation period: 7 days or more.

Long positions may be opened after the price rises and consolidates above 1.0710, with the target at 1.0810. Stop loss – 1.0650.