EUR/USD Forecast: ECB QE exit talks supportive of the ongoing bullish move
|The shared currency continued scaling higher on Wednesday and was further supported by hawkish comments by ECB officials, reaffirming that the central bank is likely to announce the timing to end its massive bond-buying program at next week's policy meeting on June 14th. The policymakers tried to get their thoughts in before the blackout period, starting today, and show conviction that inflation is moving towards the ECB's inflation target of just under 2%.
The EUR/USD pair extended its recovery move from 10-month lows, set last week, and touched a two-week high level of 1.1800 handle during the Asian session on Thursday. Investors now look forward to the final Euro-zone GDP print, due at 0900 GMT today, for some fresh bullish impetus. Market consensus points to 2.5% y/y and 0.4% q/q growth rate during the first quarter of 2018.
Technically, the pair on Wednesday decisively broke through a key barrier near the 1.1725-30 region, marking 23.6% Fibonacci retracement level of the 1.2414-1.1510 recent downfall. With short-term technical indicators gradually moving into bullish territory, the momentum seems more likely to get extended towards 38.2% Fibonacci retracement level resistance near mid-1.1800s, especially if the EZ growth figures beat estimates.
However, a follow-through upsurge in the US Treasury bond yields, with the benchmark 10-year yield moving closer to the 3.0% psychologically important level, could play a spoilsport and hinder the ongoing momentum. Any meaningful retracement now seems to find immediate support near mid-1.1700s and any subsequent retracement might now be limited till an important resistance break-point, not turned support near the 1.1730-25 region.
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