The last week turned out to be a good one for the pair, as it rose above its 100-DMA located at 1.0587 to finish at 1.5182. The rally was mainly driven by the slightly hawkish Bank of England (BOE) minutes, and broad based weakness in the USD on the back of a weak US economic data. In the current week, the pair is likely to be influenced by the first quarter GDP report and manufacturing PMI. As for today, a weak CBI total trends orders data could trigger a much needed correction in the pair. Meanwhile, the election uncertainty could also weigh over the pair. Back in 2010 the pair had dropped sharply in the run up to the elections. A beginning of a similar downside move could be seen today, especially if the pair fails to sustain above the key technical levels.
The pair currently trades at 1.5177, just above the 61.8% Fib retracement of 1.550-1.4564 located at 1.5173. With the daily RSI bullish at 66.00, there is enough room for the pair to extend gains. However, we see a bearish RSI divergence on the hourly charts, while the 4-hour RSI has hit the overbought zone. Hence, a technical correction could be seen. A break below 1.5173, could see fresh offers pushing it lower to 1.5144 and 1.51 levels. On the other hand, a break above 1.52-1.5213 could drive the pair higher to 1.5318 levels.
EUR/USD Analysis: Pushing into key Fib resistance
The EUR remained surprisingly resilient on Friday even though no progress was made over the Greek debt issue at the Eurogroup meeting. If anything, the rift between Greece and its international creditors widened, with EU authorities warning the time may be running out for Greece. Still, the EUR/USD rose to an intraday high of 1.0898, before finishing the week at 1.0864 levels. Given the absence of a major market moving data release today, the pair will most likely be driven by the market's appetite for the US dollars.
The pair currently trades at 1.0865, just below the 38.2% Fib retracement of 1.1532-1.0461 located at 1.0870. On the hourly and 4-hour chart, the RSI is just above the mid-line at 50.00, which indicates further room for rise. A break above 1.09 could see fresh bids taking the pair higher to 1.10 levels. On the flip side, a failure to break above 1.0870 could lead to a fresh sell-off towards 1.0805 (50-DMA).
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