EUR/USD: near-term prospects
EUR/USD stabilized in the $1.3490/3500 area after the sell-off seen last week (50% Fibo of the decline in 2011-2012, daily Ichimoku Cloud). The pair’s now at the base of the rising channel and close to 38.2% Fibo of the uptrend.
There’s a strong event risk on Thursday/Friday (the ECB, US GDP and NFP). Given the level of uncertainty, we don’t expect euro to retrace the whole move made last week. We expect the ECB to acknowledge deflation risk. Resistance is at $1.3525, $1.3580 and $1.3630. Support is at $1.3450 and $1.3420. The loss here will lead to a decline to $1.3300 and $1.3370.
As Credit Agricole puts it, EUR/USD may decline today, but then it will be vulnerable for a temporary bounce – possibly as high as $1.3550. This should be a nice selling opportunity.
Chart. Daily EUR/USD