Current trend

The EUR/USD pair is showing noticeable growth, developing the corrective impetus formed at the end of last week. The instrument is testing 1.0880 for a breakout, updating local highs from May 20. Investor activity remains subdued as US trading floors remain closed for the Memorial Day holiday, but traders are weighing in on data released last week, including growth in business activity as well as capital goods orders: Nondefense Capital Goods Orders excluding Aircraft added 0.3% after –0.1% in the previous month, while analysts had expected 0.1%. In addition, Michigan Consumer Sentiment Index rose from 67.4 points to 69.1 points in May, with a forecast of 67.5 points.

In turn, European data that hit the market on Monday turned out to be ambiguous. IFO Business Climate Index in Germany in May remained at the same level of 89.3 points, contrary to preliminary estimates at 90.3 points, the Expectations Index strengthened from 89.7 points to 90.4 points, while experts expected 90.5 points, and the Current Assessment Index decreased from 88.9 points to 88.3 points, with expectations at 89.9 points. Meanwhile, Bank of Finland Governor Olli Rehn said that inflation in the eurozone is steadily declining towards the target level of 2.0%, so the time has come to cut interest rates. In turn, the Chief Economist of the European Central Bank (ECB), Philip Lane, was more cautious, noting that the regulator is ready to move to a "dovish" rate in June, but overall monetary policy should remain quite tight, since wage growth will not normalize before 2026 of the year.

Support and resistance

Bollinger Bands on the daily chart show a steady increase. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD indicator is growing, having formed a new buy signal (located above the signal line). Stochastic grows more steadily and is rapidly approaching its highs, which reflects risks of the overbought euro in the ultra-short term.

Resistance levels: 1.0900, 1.0930, 1.0964, 1.1000.

Support levels: 1.0863, 1.0842, 1.0820, 1.0800.

Trading tips

Long positions can be opened after a breakout of 1.0900 with the target of 1.0964. Stop-loss — 1.0863. Implementation time: 1-2 days.

A rebound from 1.0900 as from resistance, followed by a breakdown of 1.0863 may become a signal for opening of new short positions with the target at 1.0800. Stop-loss — 1.0900.