EUR/USD: a losing week
Here are surprises from the European Central Bank, the Greek question and other things in focus.
European PMIs were mostly lower, but still rather high. The ECB surprised the market by saying that it may increase the amount of bond purchases in May and June. The market has overreacted to the news, but then traders realized that the overall size of quantitative easing will remain the same: the ECB’s buying more bonds in these 2 months, because it will buy less in July and August when the amount of liquidity will be lower.
Next week there will be a few releases of minor importance in the euro area like German consumer climate on Wednesday. On Monday German and French banks will be closed because of holidays. Greek government spokesman said that the nation’s deal with creditors is expected in the next 10 days. German Chancellor Angela Merkel said, however, that Greece still has a lot of work to do, so there’s no big breakthrough yet. Next week the tensions should intensify.
Resistance is at 1.1300 and 1.1400. EUR/USD tested important support in the 1.1100/1.1050 area. Below 1.1050 a decline to 1.0920/00 will act as the next strong support ahead of 1.0710/00. The picture has become more negative for the euro. However, as USD bulls still lack certainty selling of the pair won’t be very intense, though we expect the 1.0900 zone to be hit.