EURUSD rally pauses ahead of US jobless claims and GDP data

Summary:
• EURUSD rally paused as investors waited for US initial jobless claims data and the second reading of GDP numbers. The eurozone will release confidence data

The EURUSD pair was little changed during the Asian session as investors reflected on the fundraising proposal by the European Commission. The pair will today react to the US jobless claims, GDP, and pending home sales data. It will also react to the European business and consumer confidence data.

EUR/USD reacts to EU funding

The EURUSD pair has been on an upward trend since Friday when it was trading at 1.0870. The pair rallied yesterday after the European Commission unveiled a massive $826 billion funding package that will help countries deal with the pandemic. The funds will be given to member states as grants. While the news was positive, it will find resistance from the so-called frugal four countries that favour loans. Southern countries like Spain and Italy, with the support of Germany and France favour low-interest loans.

Important data ahead

The EURUSD pair will react to a slew of economic data from the United States and European Commission. In Europe, we will receive preliminary inflation data from countries like Spain and Germany. Also, we will get business and consumer sentiment data from the European Union. These numbers are expected to show that sentiment improved slightly in May as countries started to reopen their economies.

In the United States, we will receive important GDP data. Analysts expect that the economy contracted by 4.8% in the first quarter. They also expect that the initial jobless claims rose again by more than 2 million. Other important upcoming data will be personal spending and pending home sales numbers.

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EUR/USD technical forecast

The EURUSD pair is trading at the important psychological level of 1.1000, which is a few inches below the highest point in March. On the daily chart, the price is above the 50-day and 100-day exponential moving averages. It is also a few pips below the 50% Fibonacci retracement level. Therefore, I expect the bullish trend to continue as bulls attempt to test the 50% Fib at 1.1068.

On the flip side, a move below 1.0950 will invalidate this forecast. This price is along the 100-day exponential moving averages and is slightly below the 38.2% retracement.