In this EURUSD forecast, the shared currency has managed to fade part of the recent pessimism and is now helping the pair to regain the area above 1.1300 the figure, or daily highs.
March 25, GKFX – The pair is posting some decent gains after two consecutive daily pullbacks, meeting dip-buyers and reclaiming the 1.1300 handle and beyond.
Poor prints from advanced PMIs in core Euroland in combination with a pick up in the demand for the greenback sent spot lower during the second half of last week. The sharp correction came after the pair clinched multi-week highs in the mid-1.1400s following the FOMC event last Wednesday.
Moving forward, the key German IFO indicator is due later in the European calendar, while investors’ attention remains on the Brexit negotiations and fresh market chatter on the recent inversion of the US 3m-10y yield curve.
What to look for around EUR
Market participants have left behind the recent and renewed dovish stance from the ECB, focusing instead on the broad risk-appetite trends, USD-dynamics, and domestic data. Regarding the latter, and looking to the broader picture, the view of a slowdown in the bloc has been ‘confirmed’ last week following disappointing advanced PMIs in core Euroland.
This, in turn, should add to the idea of a ‘patient for longer’ stance from the ECB. On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections, where the focus of attention will be on the potential increase of the populist option among voters.
At the moment, the pair is gaining 0.06% at 1.1307 and a breakout of 1.1323 (21-day SMA) would target 1.1359 (100-day SMA) en route to 1.1448 (high Mar.20). On the other hand, the next support emerges at 1.1273 (low Mar.22) seconded by 1.1234 (low Feb.15) and finally 1.1215 (2018 low Nov.12).
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