EUR/USD: position of the bulls improved
During the past week EUR/USD set a minimum at 1.0520. That’s higher than the previous low in the 1.0460 area. Then the euro managed to correct upwards to the levels around 1.0800 as traders covered short positions on the stream of weaker-than-expected economic statistics from America.
The European Central Bank left its policy unchanged in line with expectations. Mario Draghi said that quantitative easing (QE) is already bringing positive results, but rejected the idea that the ECB may finish the asset purchase program before September 2016. German 10-year yields fell much below than those in the US. Draghi’s promise will keep European yields under pressure thus limiting the advance of the single currency.
EUR/USD may find some resistance in the 1.0900/1.0940 area – the daily Ichimoku Cloud. Next obstacle will be at 1.1000 (55-day MA). Still, the markets have pushed back the expectations of the Fed’s rate hike, and that is sure a drag on American currency. Next week there will be few data releases in the United States to change this sentiment. Plus there were too many shorts on the euro, so next week we may see more of correction up in EUR/USD. Support for the pair is at 1.0700.
Next week there will be a bunch of important data from Europe. On Tuesday watch German and euro area’s economic sentiment index. On Thursday the region’s flash manufacturing and services PMIs will be released and on Friday there will be more figures from Germany. In addition, European finance ministers will meet to discuss the Greek question. For now the nation still hasn’t satisfied the demands of its creditors who are calling for specific economic reforms. The odds are that the nation won’t get the money next week, and its financial state is quite shaky. That will deteriorate investors’ risk sentiment.