EUR/USD continues to trade in positive territory at around 1.0900 on Tuesday after the data from the Euro area showed that the GDP in the first quarter expanded by 1.3% on an annual basis as expected. Investors await April Retail Sales data from the US while keeping a close eye on Fedspeak.

EUR/USD has secured under the Tenkan-Sen line of the indicator. The instrument is going below the Ichimoku Cloud, which suggests a downtrend. A test of the Kijun-Sen line at 1.0905 is expected, followed by a decline to 1.0735. An additional signal confirming the decline will be a rebound from the upper border of the descending channel. The scenario can be cancelled by a breakout of the upper border of the Cloud, securing above 1.1015, which will mean further growth to 1.1105.

Despite the latest rebound, the Relative Strength Index (RSI) indicator on the four-hour chart stays below 50, suggesting that EUR/USD is staging a technical correction rather than starting a new leg higher. 1.0900 (psychological level, static level) aligns as immediate resistance for the pair ahead of 1.0950 (Fibonacci 23.6% retracement of the latest uptrend, 200-period Simple Moving Average (SMA) and 1.0990/1.1000 (100-period SMA, psychological level).

On the downside, a four-hour close below 1.0870 (Fibonacci 38.2% retracement) could attract sellers. In that scenario, EUR/USD could face interim support at 1.0850 (static level) before extending its slide toward 1.0800.

EUR/USD should remain primarily driven by the USD leg and the US debt-limit saga: we see 1.0800 as the key benchmark support, and a break below that level would probably signal a significant deterioration in market sentiment

EURUSD taking advantage of 1.0800 support

May 16 2023