EUR/USD Forecast: bullish, despite dollar's weekly gains

The American dollar managed to recover some ground this week, except against commodity-related currencies, which advanced on the back of strong comeback in worldwide stocks. In fact, it was the same reason which supported the greenback, as quite constructive Chinese data spooked fears of a global slowdown, at least temporarily. Nevertheless, dollar's gains are far from suggesting that its bearish trend is over. In fact, the negative tone of the greenback will likely persists until the upcoming  FED's meeting, next April 26-27. 



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On Friday, however, dollar's rally was interrupted, as stocks were unable to extend their rallies, and oil prices turned south, as speculators rushed to take out profits, ahead of the Doha, Qatar meeting this weekend. Oil producers from all around the world will meet this Sunday to discuss the possibility of an output freeze. Hopes of an agreement are limited, as Iran is clearly refusing to join and other countries won't reduce production if Iran doesn’t. 

Also, weighing on the greenback were poor macroeconomic readings as Industrial Production fell by 0.6% in March, following a 0.5% decline in February, whilst the University of Michigan’s preliminary consumer sentiment index fell to 89.7 in March the lowest since September 2015. 

From a technical point of view, the pair topped out at a major static resistance level this week, the 1.1460 mark, before shedding over 200 pips. In the weekly chart, is clear that the level is a major long term resistance, as the pair has been unable to settle above it since January 2015. In the same chart, the weekly slide has forced technical indicators towards the downside, although they remain above mid-lines, whilst the 20 SMA maintains a strong upward slope around 1.1060, also the 61.8% retracement of the latest bullish run between 1.0821 and 1.1461.  

Daily basis, the pair has managed to regain the 1.1300 level, but remains below 1.1330, the base of its latest range. The price is developing below a bullish 20 SMA, whilst the price halted its recovery around the 23.6% retracement of the mentioned rally. Also, and in this last time frame, the technical indicators have turned flat around their mid-lines, maintaining a neutral stance into the close. 

Overall, and despite the weekly retracement, the upside remains favored as long as the price remains above 1.1220, the 38.2% retracement of the mentioned advance. Below this last, the decline can extend towards the 1.1120/60 region next week, whilst a break below it will favor a decline down to 1.1060, reverting then, the ongoing bullish trend. 

An immediate resistance comes at 1.1330, but it would take a recovery above 1.1380 to see the pair rallying back towards the 1.1460 region. A break above this last, could see the pair up to 1.1713, August 2017 monthly high.  

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