- EUR/USD set off the week on the wrong footing, battling 1.0500.
- EUR sellers eye 1.0410 should 1.0470 support area cave in.
- 1.0600 is the level to beat for bulls, as the downside appears favored.
EUR/USD is challenging the bullish commitments at 1.0500, as the safe-haven appeal of the US dollar outshines amid roiled markets, as global growth concerns keep lurking.
Meanwhile, Fed-ECB monetary policy and economic divergence remain in play, despite the ECB policymakers making a case for a July rate hike. This central bank imbalance keeps adding to the upside in the US dollar.
China remains a key concern for markets, as of now, with stringent and extended covid lockdowns hurting the recovery in the world’s second-largest economy. Meanwhile, investors also remain wary ahead of Russian President Vladimir Putin’s Victory Day speech later this Monday. Putin is widely expected to use Victory Day to declare a military victory in the conflict. The Eurozone Sentix Investor Confidence data will be also awaited.
As observed on the daily chart, EUR/USD is extending its latest leg down towards the last week’s demand area just above 1.0470.
If that support cracks, then a fresh downswing towards the falling trendline support of 1.0410 will be inevitable.
The 14-day Relative Strength Index (RSI) is inching lower below the midline, currently sitting just above the oversold territory, allowing room for more declines.
EUR/USD: Daily chart
On the upside, any recovery attempts will meet stiff resistance at 1.0600, which is the round figure, as well as, Friday’s high.
The next critical resistance is aligned at 1.0641, May 5 top, above which bulls could flex their muscles towards the bearish 21-Daily Moving Average (DMA) at 1.0689.
