EURUSD Weekly Outlook – May 6, 2021

Last Updated on May 7, 2021

EURUSD Outlook – May 6 2021

Introduction

A new month and new week are always an exciting moment for Race Option investors, traders and forex brokers as they await strong fundamental news regarding the US economy which will generate trading opportunities for them.

Let’s dive into the EURUSD charts following a top-down approach while touching on recent news events in the US and Euro zone.

EURO News

The German Purchasing Manager Index

They carried the survey out among 400 purchasing mangers within a certain period to rate the conditions of businesses in terms of production, employments, prices and inventories. 

The indicator is a leading tool in accessing the health of the economy. A sign above 50 is an expansion of businesses, but a figure below shows a contraction.

A repot that is greater than the actual is good for the Euro, but a lower outcome will weaken the Euro and strengthens the U.S dollar. The Previous outcome was 50.1 while the forecast is 50.1.

The Euro had a good run against the US dollar as of April, having had a bullish run from the low of 1.16875 to the recent high as of the time of the report. 

Considering a weekly chart view, we notice a slow but steady demand for the EUR compared to the US dollar, which can lead to new heights this month.

THE US NEWS

The Average Hourly Earnings mm

The reason forex brokers care about the average hourly earnings is because of its leading indicators on consumers’ inflation data. If the cost of labor is high, they usually pass it down to the consumers.

However, the cost or price that the businesses pay for labor does not include the farming industry during the report. They usually release it on the first Friday of a new month. If the result is greater than the forecasts, it is good for the U.S dollar, but an actual lower than the expected will mean a weak currency for the dollar.

The forecast is 0.0% while the previous data was -0.1%

EURUSD Technical Analysis

EUR vs. USD Monthly Chart Overview: Bullish Swing in resistance Zone

EURUSD daily chart - May 3 2021

Monthly Resistances: 1.25558, 1.21543

Monthly Supports: 1.10390, 1.06359

The previous month ended on a bullish note and closing with a bullish candle around the opening price of March. There’s a possibility of the bulls taking the EURUSD pair higher above the resistance of 1.25558 if the bullish momentum can be sustainable.

The resistance zones are still contention areas for the Bulls, as the Bears have dominated the levels since 2018. If the bulls cannot overturn the level, we shall see the bears push back the price for another bearish swing to the support of March 2020 (1.06359) the peak of COVID19 pandemic.

Weekly Chart Bullish

EURUSD weekly chart - May 3 2021

Weekly Resistance Level: 1.21500, 1.2350, 1.2500

Weekly Support Level: 1.16875, 1.08965, 1.07750 

The weekly chart of EURUSD pair shows that the bullish run has been running for the past three weeks, and the pair will probably reach the 1.23500 levels if the new week will continue on a bullish rally. A close above the zone will attract more buyers into the market.

 

If the resistance level of 1.21500 should reject price, we can say that a double top pattern on the pair will push down the pair for short position trades to the low of 1.16875.

Daily Chart Outlook: Uptrend 

Daily Time Frame Resistance Level: 1.22430, 1.21500

Daily Time Frame Support Level: 1.17042, 1.200

We confirmed the wide bullish divergence with the bull’s surge from the 1.17042 support level which rallied throughout the month of April and retesting the 1.21500 zone for either a breakout or a retest of the zone.

A close above would mean a continuation of the uptrend, while a rejection would mean trend reversal, which will probably take the price down to the low of 1.17042.

Bullish Scenario:

The bulls are likely to test the 1.21500 trend on the daily time frame as the new trading week opens.

Bearish Scenario:

A possible bearish scenario may come to play as we expect the Bears to react from the resistance zones on the daily chart if the bullish move fails.

Conclusion and Weekly Price Objectives

The US dollar will probably gain some strength if the resistance zone can push off the bulls from the 1.21500 levels in the coming days. The speech from the FED chairperson Jerome Powell will influence the performance of US dollar in the coming weeks. 

We need to hear more positive feedback from the European blocks regarding the third wave of the COVID-19 infection and vaccines distribution for the quick recovery of the economy.

James S. Martin
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