EURUSD makes bearish breakout as dollar bounces back
The euro made a bearish breakout after relatively mixed economic data from Europe. In Germany, retail sales declined by 5.5% year-on-year in April after jumping by 7.7% in the previous month. This increase led to a 7.7% year-on-year rise, lower than the median estimate of 10.1%. According to Destatis, the Federal Statistical Office in Germany, retail sales were dragged by the lockdown implemented in the second half of the month and adjustments after the Easter shopping. Further data showed that the bloc’s producer price index (PPI) rose by 7.6% year on year after rising by 4.3% in the previous month. This was the fastest growth in years and it came a day after data showed that the headline CPI rose to 2.0% for the first time since 2018. Focus shifts to the ECB that will start its meeting next week.
UK stocks rose as investors cheered the ongoing recovery of the region. The FTSE 100 index rose by 0.30% to 7,102 pounds. The top gainers in the index were mining companies like Rio Tinto, Anglo American, and Glencore. Oil supermajors like BP and Royal Dutch Shell also rose. Data published by the Bank of England (BOE) showed that the country’s mortgage approvals increased from 83.4k in March to more than 86.92k in April. The total amount provided declined from 11.2 billion pounds to 3.3 billion pounds. In general, analysts are cheering the full reopening set for later this month.
The Australian dollar declined even after the relatively strong GDP data from Australia. The numbers showed that the economy expanded by 1.8% in the first quarter after rising by 3.2% in Q4. This growth led to an annualized gain of 1.1%. The growth was mostly because of a significant increase in capital expenditure and consumer spending, as well as the higher commodity prices due to strong demand from China. The data came a day after the RBA released a hawkish interest rate decision.
The AUDUSD pair declined to 0.7720, which was lower than this week’s high of 0.7773. On the hourly chart, the pair managed to move below the ascending channel that is shown in pink. The 25-day and 15-day moving averages made a bearish crossover while the Relative Strength Index (RSI) declined close to the oversold level of 30. It also moved below the neckline of the double-bottom pattern at 0.7730. Therefore, the pair may keep falling as bears target the next key support at 0.7700.
The EURUSD pair declined to a low of 1.2170 as the US dollar bounced back. On the four-hour chart, the pair managed to move below the pink ascending trendline. It also crossed the 25-day moving average and is approaching the neckline of the double-top pattern at 1.2130. The Relative Strength Index (RSI) has also dropped to 38. Therefore, the pair may keep falling as bears target the next key support at 1.2100.
The USDCHF pair rose to an intraday high of 0.9022. On the four-hour chart, the pair has formed a double-bottom pattern at 0.8930. It also moved above the 25-day moving average. It is also approaching the neckline of this double-bottom pattern. The pair may keep rising as it approaches the next key resistance at 0.9050.