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27.05.2020 05:16 AM
Forecast for EUR/USD on May 27, 2020

EUR/USD

Excellent data on house sales in the primary market came out on Tuesday - the April indicator showed 623,000 against expectations of 492,000 and 619,000 in March. A little earlier, in the afternoon, the consumer climate index in Germany from GfK in June showed an increase from -23.1 to -18.9 (forecast -19.1), which gave the first impetus to the euro's growth. But the single currency's growth on strong US data is more interesting, while all markets were up; S&P 500 1.23%, the yield on government bonds increased, which means that market players got rid of "tools of fear", and gold also fell in price by 0.75% with a vigorous growth in industrial non-ferrous metals. This is a classic picture of buying risk, growing interest in high-yield instruments. And if the pattern of euro's growth amid positive data from US economic data continues for about two weeks, this trend may develop into a long-term one, as was the case from the summer of 2012 to the spring of 2014. The intensification of the US-Chinese trade war, the "hard" Brexit and the likely second wave of the coronavirus epidemic can prevent this scenario. That is, the history of the summer of 2012/spring of 2014 will repeat itself as a farce. In the practical part, this means that buying the euro even on an established trend will be very risky.

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The euro has reached the upper limit of the almost two-month range of 1.0767-1.0995. The price is higher than both indicator lines and the Marlin oscillator is in the zone of a positive trend, and the signal line of the oscillator is developing exactly according to its own support of the trend line. The probability of continued price growth is 75-80%. Overcoming the upper limit of the range will increase the optimism of traders and the price will go to the channel line in the region of 1.1140.

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The price is also higher than the indicator lines and Marlin in the growth zone on the four-hour chart. Consolidating the price over 1.0995 will be a condition for growth to 1.1140. Recovery of the falling mood will occur after the price drops to the signal level of 1.0885.

Laurie Bailey,
Analytical expert of InstaForex
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