EUR/USD Forecast: Finally Time for a Breakout?
by Valeria Bednarik - FXStreet
It was a bad week for the greenback, as
there was not a single sign that the US has reverted the slowdown
suffered late 2015. In fact, it seemed that things not only were worse
during the first quarter of the year, but that the situation persisted
through April.
US data released on Thursday showed that
growth in the country was for the most tepid during the first three
months to March, with the advanced GDP printing 0.5%, below the 0.7%
expected and the previous 1.4%. The EU on the contrary, grew by 0.6%
against expectations of 0.4% and previous 0.3% according to official
data published on Friday.
Ever since the week started, US data
disappointed, with housing figures missing expectations, Durable Goods
Orders plummeting, weekly unemployment claims rising and consumer
confidence easing. The only good news was an uptick in personal income,
but given that expenditures shrunk, the positive reading is mostly
negative, as it indicates consumption is retreating.
Adding to
the picture, the US Federal Reserve had an economic policy meeting, and
offer little, if none, to work with, as while leaving doors open for a
rate hike and expressing less concerns over the external risks to the
economy, it also failed to suggest a certain date for a hike.
Speculation that June will be another worthless meeting has took its
toll over the greenback afterwards.
The EUR/USD pair surged
steadily during these last five days, and is just below the major static
resistance level at 1.1460. The daily chart shows that the pair bounced
from the 38.2% retracement of the latest bullish run between March and
April around 1.1220, the low posted at the beginning of the week, while
the technical indicators head sharply higher above their mid-lines, all
of which supports some additional gains for the upcoming week.
Still,
the 1.1460 level has been a tough bone to break for over a year now,
and a breakout is still not confirmed. In fact, the price can go
slightly above the level to "clean" shorts and reduce the pressure, to
later advance. A clearer confirmation will come then, with some steady
advance around the 1.1500 level, which will open doors for a test of 1.1713, August 2015 monthly high.
For
the upcoming days, the pair has an immediate support at 1.1360, but it
will take a break below 1.1310, to confirm additional declines, back to
the 1.1220 price zone. Buying interest is expected to surge around this
last, as dollar has little room for long term gains, and market will
keep taking advances in the currency as opportunities to sell.
