During the early European trading hours on Friday, the EUR/USD pair was observed trading on a softer note near the 1.0775 mark. The decline in the major currency pair is attributed to the resurgence in demand for the US Dollar (USD), fueled by hawkish remarks from Federal Reserve (Fed) officials.
Later in the day, market participants will closely monitor the release of the US Michigan Consumer Sentiment Index for May, which is anticipated to decrease from 77.2 in April to 76.0 this month.
Analyzing the daily chart, it becomes apparent that the EUR/USD has maintained a downward trajectory within a descending trend channel since mid-December 2023. Despite remaining below the crucial 100-period Exponential Moving Average (EMA), the 14-day Relative Strength Index (RSI) resides in bullish territory around 55, suggesting the potential for further upside movement.
Identifying key resistance levels, attention is drawn to the 1.0790–1.0800 zone, marked by the presence of the 100-day EMA and the upper boundary of the descending trend channel. Beyond this, additional resistance is encountered near the April 9 high of 1.0885, followed by levels at 1.0943, 1.0981, and the psychological level of 1.1000.
Conversely, initial support for the EUR/USD pair is found near the May 9 low at 1.0724. Should selling pressure persist, the pair may target lower levels such as the May 2 low of 1.0650 and the April 16 low of 1.0600. A breach below these levels could potentially trigger a decline towards the lower boundary of the descending trend channel, currently situated at 1.0500.
