EUR/USD Could Accelerate Its Slide On A Break Below 1.2140

EUR/USD Current Price: 1.2170

• FOMC Meeting Minutes showed some participants are willing to discuss tighter policies.
• EU April inflation came in as expected at 1.6% YoY,  although the core reading contracted.
• EUR/USD could accelerate its slide on a break below 1.2140.

The EUR/USD pair trades in the 1.2158 price zone, down for the day. The pair peaked at 1.2245 and quickly met buyers on a dip below the 1.2200 threshold, led mainly by the market’s sentiment, the latter correlated to government bond yields. The German 10-year bund yields climbed to the highest in two years, while the US 10-year Treasury note peaked at 1.67% at the beginning of the European session, providing temporary support to the greenback. European and American equities plunged but got to bounce from intraday lows as yields retreated.

On the data front, the EU published the final reading of April inflation figures. The Consumer Price Index was up by 1.6% YoY as expected, although the core reading contracted to 0.7% from 0.8% previously. In the US, the FOMC published the Minutes of its latest meeting, re-triggering dollar’s demand, as some members are willing to discuss tapering in the upcoming meetings. Stocks returned to the downside, while government bond yields surpassed the mentioned highs to reach fresh weekly ones.

This Thursday, the EU will publish the March Current Account and Construction Output for the same month. The US will release the May Philadelphia Fed Manufacturing Survey and Initial Jobless Claims for the week ended May 14, expected at 405K.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair trades near a daily low of 1.2159 and is at risk of extending its decline. The 4-hour chart shows that it is currently struggling with a mildly bullish 20 SMA, poised to break below it. The longer moving averages keep heading higher, well below the current level, while technical indicators turned sharply lower within positive levels. The slide could gain bearish momentum on a break below 1.2140, the immediate support level.

Support levels: 1.2140 1.2095 1.2050

Resistance levels: 1.2245 1.2290 1.2330