EUR/USD: waiting for the EU GDP
The single currency has slowed its rally after having peaked at $1.3400 on Thursday. On Monday EUR/USD opened the week with a bearish gap and is now testing the levels below $1.3300. There is nothing strange about it as the pair has approached a strong resistance area at $1.3400/15 (June highs, 200-week MA) and then – at $1.3440/65 (100- and 55-month MAs).
Current strength of the euro can be explained by the remaining uncertainty about the Fed’s QE tapering and by the positive euro zone’s macro trend. Questions about the US monetary policy are likely to stay the main EUR/USD factor for the next couple of months. Even if the euro zone issues brilliant statistics, US policy tightening news will push EUR/USD lower. Euro has room for strength as long as uncertainty in America persists.
As for the euro zone, this week the market will be closely watching the block’s preliminary Q2 GDP. According to the consensus, the euro zone’s economy returned to growth for the first time since 2011 and expanded by 0.2% q/q (Q1: -0.2% q/q). Positive data could rapidly push the EUR/USD to the upside: no doubt that the end of the 6-quarter recession is a good sign. However, it is important to remember that growth is widely expected to stay very slow in the next months. The euro zone’s recovery is very vulnerable to all the external conditions.
Near-term support is seen at $1.3280 (bottom of a July-August channel, 2013 resistance), $1.3230, $1.3200 and $1.3180. Slide below the last level could be a good selling opportunity.
Chart. Daily EUR/USD