EUR/USD to resume its downfall after another dead-cat bounce

Buyers have come to keep EUR/USD above 1.19, but this minor upside move looks like another dead-cat bounce ahead of further falls. That is a common pattern for the pair, as FXStreet’s Analyst Yohay Elam notes.

See – EUR/USD set to fall to 1.16 in 12 months as the dollar dip is transitory – Danske Bank

Key quotes

“Concerns that inflation lifts its head despite calming words from the Federal Reserve caused jitters in global markets and supported the dollar. There is no reason why the bond sell-off cannot resume, carrying the greenback higher with it.”

“Clashes between the world's largest economies is a reason to worry. US and Chinese foreign ministers met in Alaska for the first such encounter in President Joe Biden's era. The counterparts publicly criticized the other's human rights records and the chances of a summit seem to have dropped. While Sino-American trade continues at full force, friction may cause economic damage.”

“In the old continent, the debacle around the jabs – enmeshed with politics around Brexit – has undoubtedly weighed on confidence. Europe's vaccination campaign is set to remain slow in the near future while the US is on track to reach 50% of its population by mid-May.”

“Support awaits at 1.19, the daily low, followed by 1.1880, a cushion seen earlier this week.”

“Some resistance is at the daily high of 1.1920, followed by 1.1965, which capped a recovery attempt early in the week.”