With a daily gain of more than 50 pips, the EUR/USD pair was able to erase it weekly losses and is about to close the week near the 1.12 handle, for the second week in a row. As of writing, the pair is trading at 1.1197, up 0.4% on the day.
Dovish comments from today's Fed speakers weighed on the greenback, pushing the US Dollar Index back below the 97 mark for the first time since the weekly bearish opening gap. St. Louis Fed President James Bullard argued that it was doubtful that the inflation was moving towards Fed's target and the bank could wait and see how possible changes in fiscal, tax or regulatory policy change economic growth. Furthermore, Cleveland Fed President Loretta Mester said that there was no immediate need to tighten policy as the gradual rate-hike path would allow for aberrations in inflation.
For the week ahead, ING analysts explain that markets will be looking for guidance over the Fed's 2H17 policy sequencing (balance sheet or rate hike next) given the backdrop of disinflationary pressures. They further add that core PCE inflation and personal income/spending (on Friday) will be the key data to watch out for.
Technical outlook
In her weekly assessment report, FXStreet analyst Valeria Bednarik explains that bears are clearly a majority in all the time-frames forecasted for the pair, but the average targets are quite small: the pair is seen between 1.1000 and 1.1100 for the upcoming months, a result of the latest consolidative range leaving investors clueless on direction.
Key quotes
"In a three months view, the target's range is quite wide, with the pair seen as low as 1.0600 and as high as 1.1800, with this last being a clear exception."
"The number of short-term bears decreased, from 73% to 64% in a weekly perspective, but increased longer term, representing now a 62% by the end of the quarter from previous 60%."
Banks' analysis:
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