EUR / USD was trading in the red zone on Tuesday, under pressure from the dollar and general political and economic uncertainty in the EU.
The main driver for strengthening the dollar yesterday was data on the CB consumer confidence index, which in a month rose from 129.2 points to 134.1, with a forecast of 130.1. The growth of this indicator suggests that consumers in general are optimistic about the prospects for the development of the American economy and are ready to increase their spending in the medium term.
The European currency is under pressure by the results of the elections to the European Parliament and the increased risks associated with the UK leaving the EU without an agreement. In general, investors were satisfied that there were not many representatives of populist parties in the European Parliament, but the political forces that determined the vector of development of the EU for a decade have lost a significant part of their positions, and now the leaders of the union countries have a difficult task of appointing new leaders (including the heads of the European Parliament and the ECB), which can solve the many political and economic problems in the EU.
One of the problems that needs to be addressed is the threat of a “tough” Brexit, which can seriously damage the economic and political stability of the Union.
Today in the morning, the motion vector of the EUR / USD pair will be determined by economic statistics data from the leading EU countries. France has already published data on the consumer price index and GDP for the 1st quarter. All indicators coincided with forecast expectations, therefore, did not have any impact on the trading. Later, data on the German labor market will be known and a report on financial stability from the ECB will be presented. There are no important economic publications in the USA today.
On the graph yesterday, the breakdown of the level of 1.1180. This is a bearish signal, making the next target for the price level 1.1145. Since this mark has not yet been reached, today, after a slight correction to 1.1180-95, we are waiting for the resumption of the downward movement and the achievement of the target level noted above.
· Resistance levels: 1.1195, 1.1220, 1.1260.
· Support levels: 1.1145, 1.1100, 1.1050.
The main scenario - a correction in the area 1.1195 and the resumption of the downward movement.
An alternative scenario - consolidation above 1.1195 and growth to 1.1220.
The market remains moderately negative news background, which contributes to the further development of the bearish movement. Accordingly, intraday preference is still given to shorts in the range of 1.1180-1.1195.