EUR/USD Fails Test of 61.8% Retracement of Decline to April Low

EUR/USD tested the 61.8% retracement of the decline from the late March peak to the April low in Thursday’s trading and reversed to the downside. The pair is following through to the downside today, currently trading at 1.0695, a loss of 0.2% from Thursday’s North American close.

In today’s session, it was reported that the flash Eurozone Markit PMI manufacturing index for April strengthened to 56.8 from the March reading of 56.2. This was above expectations for a reading at 56.0 and the strongest reading in six years.

In addition, preliminary German manufacturing PMI for April came in at 58.2, versus expectations for a reading at 58.0 and a prior reading at 58.3.

Concerns over the Sunday’s first round of voting in the French Presidential election appear to be weighing on EUR/USD. In addition, the pair became overbought as a result of the advance to this week’s high. Thus, further gains could be difficult to achieve in today’s trading.

However, an eventual move above 1.0777, which corresponds to a 61.8% retracement of the decline from the late-March high to the April low, is expected. Such a development would increase the probabilities of a full retracement with a move back to the March high at 1.0906.

Support is now at the mid-point of Tuesday’s long green candle, which comes in near the 1.0680 level.

In the US today, Existing Home Sales will be reported at 10:00 ET.

EUR/USD Daily Chart

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Tracy L. Morganthall, CMT, has been a Technical Market Analyst for more than 20 years. She has experience analyzing and producing reports on equities, both domestic and international markets, as well as Forex and commodities. She attended Trenton State College in Trenton, New Jersey, earning a Bachelor's in Finance.