EUR/USD rose above $1.3000
EUR/USD opened the week at $1.2990 and rose above $1.3040. On Friday euro dipped to $1.2940, but closed the week a bit below the big $1.3000 figure. Today Spanish, Italian and final euro zone’s manufacturing PMIs improved, but still remain below 50. In the US watch for the ISM manufacturing PMI at 14:00 GMT.
This week market attention will be focused on the ECB rate decision on Thursday. There is some speculation about the possibility of setting negative deposit rates in the euro zone, but last week the ECB’s officials said the regulator is still very far from implementing them. Absence of policy changes could relieve some priced-in pressure from the euro and give space for a higher bullish correction in the end of the week. However, in a longer term we expect the greenback to retake the leadership. Our initial bearish target lies at $1.2750. Support is seen at $1.2975 and at $1.2950.
For now the upside in EUR/USD is capped by $1.3060 (last week’s highs), $1.3085 (top of the daily bearish Kumo) and $1.3100/15 (38.2% Fibo). We will review our bearish forecast in case of a break above $1.3250.
Chart. Daily EUR/USD