The week opened with a continuation of last week’s US dollar slide after the soft inflation reading and the contraction in retail sales. Today’s data didn’t help the greenback. The NY Empire State Manufacturing Index in April dropped from 16.4 to 5.2 while NAHB Housing Market Index fell from 71 to 68. Wall Street reopened after Friday’s Holiday while in Europe, most markets remained close. On Tuesday, liquidity is expected to be back at normal levels. In the US economic data to be released includes housing starts, building permits, and industrial production. Geopolitical concerns remain on the table, from Asia to the US, with a stop in the Europe. The Vice Foreign Minister said on Monday, that North Korea will conduct missile tests weekly. In 8 days, will be the first round of the French Presidential elections. The latest polls helped the euro by showing candidate Macron beating Le Pen, 60% to 40%.
Treasuries rallied at the beginning of the week but then pulled back, with yields back to Thursday’s levels after reaching fresh monthly lows. Equity prices started the week with gains. Near the end, the Dow Jones was up 0.60% and the Nasdaq 0.50%.
The euro gained ground against the US dollar on Monday and approached the key short-term resistance area located around 1.0680. The EUR/USD pair continues to move with a bullish tone but in order to clear the way to more gains it needs to break and hold above 1.0680/1.0700 during the next sessions. That area contains various resistance levels and also the 20-day moving average. The next resistance might be seen at 1.0740 and then 1.0765/70. The bullish bias will remain intact as long as it remains above 1.0610 (short-term uptrend line); below that area, the pair is likely to suffer an important bearish pressure, and a decline under 1.0600 could signal an acceleration toward a test of last week lows.
Support levels: 1.0610 1.0570 1.0530
Resistance levels: 1.0705 1.0740 1.0780