Good day forex traders.
Welcome to our weekly review of the EUR/USD currency pair. In the previous EUR/USD forecast we noted that the 1.08 resistance was being tested. Sentiments appeared to be shifting towards the euro currency. Having said that, we do note of a possible double top formation which may see a bearish reversal.
Referring to the weekly EUR/USD chart above, we see that the double top formation may still be a possibility. Monitoring the resistance of 1.08 to see if it holds will be a priority this coming week.
A reversal may bring us to the 1.03 region eventually while continued bullish breakthrough will likely seek 1.1.
An article on the BBC summarizes the increased positivity of the Euro Zone.
“Eurozone businesses grew at the fastest rate in nearly six years in March, led higher by France and Germany, a closely-watched survey has indicated.
The latest Markit Composite Purchasing Managers’ Index (PMI) rose to 56.7 from February’s 56.0. A reading above 50 indicates growth.
The findings signalled the bloc’s recovery was “surging higher”, the report’s authors said.
Job creation was at its best level for almost a decade, they added.
Chris Williamson, chief business economist at IHS Markit, said: “The eurozone economy’s throttle opened further in March, with business activity and hiring surging higher.”
The PMI measures companies’ trading activity, giving a good idea of how well the underlying economy is performing. ”
Germany and France are the largest economies in the Euro Zone and hence this would likely result in an increased attention in the Euro currency. In the same report, it was also reported of the conditions enabling the possibility of the European Central Bank to embark on an exit phase of the quantitative easing program.
“Economists said the PMI data could encourage the European Central Bank (ECB) to move towards raising interest rates and further easing its monthly bond-buying programme.
“Strong eurozone PMIs increase chances for first ECB exit package in June. A package, no action, though,” said Carsten Brzeski, chief economist at German bank ING-DiBa.”
Having said so, officials may wait for further signals such as inflation and also the French elections. The German IFO Business Climatr is due early week and will ikely have some influence on the sentiments.
Across the Atlantic, the challenges of the Trump presidency are increasingly a drag on the sentiments. Markets are usually disapproving of political uncertainties. The US CB consumer confidence and unemployment claims are figures to watch out for this week.