EUR/USD Forecast: recovery continues, 1.1720 at sight
|- EU manufacturing and services activity stabilizes in June.
- Dollar still in trouble after Thursday's soft data, trade-war hit.
The EUR/USD pair trades near a weekly high of 1.1673, extending Thursday's recovery, after bottoming at yearly lows just above the 1.1500 figure. The greenback began easing Thursday after worse-than-expected local data, which anyway was not that relevant, also being dumped by an escalating trade war that triggered retaliation from multiple economies. The dollar got another hit late Thursday by a US Supreme Court ruling that allows states to require online-sales´ tax collection, which resulted in local share plummeting.
There are some headlines making the rounds this Friday indicating that White House officials are trying to restart talks with China to prevent the trade war from escalating further, which helps European equities gain some ground. An EUR-positive news was that indicating that after eight years of burden, Greece's creditors struck a deal to ease the country's repayment terms so it can exit the bailout program in August, the first step toward a economic health.
Just released, June preliminary Markit PMI were mostly positive across the Union, with the Services sector picking up as for the EU the index came at 55.0 vs. the previous 53.8. The Manufacturing index marched market's expectations with 55.0 but was below the previous 55.5. The EU composite index resulted in 54.8 beating expectations and the highest in two months. US PMI are expected to show a better performance in Manufacturing than in Services, with the Composite figure expected at 55.1 from the previous 56.6.
The pair is short-term bullish according to the 4 hours chart, as it recovered further above a flat 20 SMA, while technical indicators picked up in positive territory, maintaining their bullish slopes and at fresh 3-week highs. The pair is still developing below its 100 and 200 SMA, and well below the 23.6% retracement of the weekly slump between April and May, now a key resistance and possible bullish target on a break above the daily high at 1.1720. 1.1645, the former weekly high is the immediate resistance ahead of the 1.1600/20 price zone.
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