“Forecast” 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.
Forecast of the EUR/USD
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 Forecast.
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.