EUR/USD Forecast: tossing and turning
Having started the week at the bottom of its post Brexit range, the EUR/USD pair is now at the higher end of that region, a handful of pips below 1.1190. There was a huge shift in sentiment towards the greenback during these last few days, as all of a sudden, the raft of positive US data came to an end with poor readings in the flash Services PMI and even more relevant, the advanced GDP reading for the Q2. Consumer sentiment ad weekly unemployment claims were also a miss, but what damaged the dollar the most was the FED, that offered the hawkish stance that everyone was expected, but gave no clues over the date of a possible rate hike. The poor GDP reading fueled speculation that the Central Bank won't take action at least after the second half of 2017.
In Europe, macroeconomic data was for the most, modestly positive, not enough to suggest the region is out of trouble. In fact, the upcoming Bank stress test late Friday could become another stone in the EU's shoe, particularly referring to Italian banks.
Anyway, the pair is nearing a 5-week high of 1.1189, but it has been here a couple of times already. The daily chart, shows that the price has advanced above its 20 and 200 SMAs, but that the 100 SMA is still heading lower in the 1.1240 region. Indicators in the mentioned time frame head strongly up above their mid-lines, all of which supports some further gains, on a clear break of the critical resistance level. The pair can advance up to the 1.1300/20 region next week, but a steeper rally seems unlikely, if it will depend purely on USD weakness.
The immediate support comes at 1.1120, and the bullish tone will persists as long as above it. A downward acceleration through the level, however, can see the price returning to the 1.1050 region, en route to 1.0960.
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.
