Euro Climbed to its Highest Level in Six Months
The common currency jumped above $1.09 after the first round of France's vote last month and held around that level as most market participants expected Macron, the pro-European candidate, to win. A Le Pen victory would have raised questions about France's future in the European Union and the Euro zone
Economic data also provided a boost: GDP grew by 0.5% in Q1, showing accelerated growth. PMIs were OK, pointing to further growth and retail sales beat expectations with 0.3%. In the US, the Fed left rates unchanged and did not seem worried about the recent slowdown. The Fed helped the dollar, but not against the Euro.
EUR/USD's rise resumed last week and reached as high as 1.0999 last week. Further rise would be seen to 1.1058 projection level. But we maintain that rise from 1.0339 is a corrective move. Hence, we'd expect strong resistance around 1.1058 to limit upside to bring near-term reversal.
Initial bias in EUR/USD remains on the upside this week. The current rally would be seen to 100% projection of 1.0339 to 1.0828 from 1.0569 at 1.1058. At this point, rise from 1.0339 is still seen as a corrective move. Hence we'd expect strong resistance from 1.1058 projection to limit upside and bring near-term reversal. On the downside, break of 1.0874 support will turn bias back to the downside for 1.0569 support first.
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