EUR/USD: limited growth
Authored by Kira Iukhtenko
The single currency strengthened on Wednesday as manufacturing and services in the currency bloc expanded more than forecasted, damping expectations for a further ECB policy easing.
EUR/USD touched $1.3850 in the European session, retracing to $1.3830 later in the day. The pair broke above the short-term resistance (Apr. 11-23 high). We see that the euro remains supported by the daily bullish Ichimoku.
Despite all the today’s recovery, it is evidently too early to speak about the bulls’ return to the market. The $1.3900/4000 area remains a hard nut to crack. Our base scenario remains bearish. We recommend selling the euro on a break of the 3780 support. Next support for the pair lies at $1.3670, $1.3600 and $1.3475.
Watch a bunch of US statistics later in the day. Flash Manufacturing PMI is expected to show an increase in April, while US new home sales – to recover from a 5-months low in February. Positive data are likely to pull the pair down. Pay attention to the ECB Draghi speech on Thursday.
Chart. H4 EUR/USD