The EUR/USD pair dropped last Friday on the PCE release but found strong support at the 1.2150 area. This is an area that provided stiff resistance on the price’s move to the upside, and such it remains pivotal for any further moves.
The PCE or Personal Consumption Expenditure came out higher than expected, further fueling fears of higher inflation in the months ahead. This is the Fed’s favored way of measuring inflation, and it points to rising prices.
Because today is a holiday in the United States (i.e., Memorial Day) and also in most of Europe, the price action is unlikely to bring anything new. As such, look for the 1.22 area to keep attracting and a break and close below the 1.2150 to trigger more weakens. Also, today is the last trading day of the month, so the main London fix might be interesting to see the end of the month’s flows.
EUR/USD Technical Analysis
Bears may want to stay on the short side with a stop-loss order at the highs and a take-profit level at 1.20 and below. Bulls, on the other hand, may want to go on the long side on a new higher high, with a stop at 1.2150 and setting the take-profit level by using a 1:2 risk-reward ratio.