EUR/USD Forecast: modestly bullish, break above 1.1120 needed
Figures! the Bank of Japan did the minimum possible during their overnight policy meeting, sending the JPY sharply higher and weighing on the greenback over Asian trading hours. The Central Bank actually took a couple of measures, increasing its exchange traded funds purchases of ¥2.7 trillion, up to ¥6 trillion, and expanded its USD lending program to $24 billion, but left rates unchanged at -0.10%. The common currency followed the JPY in its way up, although the EUR/USD pair's advance has been quite moderated, as despite pressuring the 1.1100 level, the pair is unable to settle above it.
European equities opened with a strong footing, but are currently struggling around their opening levels, supporting some EUR gains, although the market will probably remain side-lined ahead of the release of US advanced GDP readings later today. The US economy is expected to have growth 2.6% during the second quarter, quite a solid figure, compared to previous 1.1%. Data coming from Europe showed that the eurozone grew by 0.3% in the same period, meeting market´s expectations and below previous 0.6%.
Technically, and according to the 4 hours chart, the pair maintains a bullish tone, as technical indicators head north within overbought levels, while the 20 SMA heads sharply higher below the current level, and points to break above the 100 SMA, as the price hovers around 1.1100. Should the price extend beyond 1.1120, yesterday's high and a strong static resistance, the rally can continue up to the 1.1160 region, while above this last, 1.1200 is the ext bullish target.
The immediate short term support stands at 1.1090, followed by the 1.1050 region. In the case of a strong dollar advance, a break below this last can see the pair closing the week around 1.1000.
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
