© Dukascopy Bank SA
Both the single European currency and the greenback posted losses over the last week, each losing 1.26% and 0.35%, respectively. American currency failed to benefit from the Euro's weakness, as disappointing retail sales report diminished hopes for a rebound in the second quarter and raised speculations the Fed can provide a dovish statement. The most traded currency pair refuse to move below 1.35-level, and it seems that fluctuations can continue, as even despite disappointing fundamentals from the world's largest economy, the Euro will be under pressure following ECB's decision to cut interest rates and extend its loan programmes. Furthermore, technicals are mixed and do not give a clear ‘buy' or ‘sell' signal. There are expectations of a rebound from 1.35 level, as descending triangle on the 4H chart was penetrated to the upside.
Dukascopy traders and Community members are also neutral on the pair, as 52% of all opened positions are bullish, while consensus forecast for the end of this week stands for 1.3551. It will be worth mentioning that last week, traders were most successful in predicting EUR/USD's performance. While more than 66% of votes were bearish, vast majority of traders mentioned they expect only slight fluctuations during this week. Emagnifico claimed "I don't expect the euro to weaken significantly, although it might bounce on the 1.3520 support before taking off again to new highs by the end of summer." At the same time, Jignesh believes the pair will consolidate around 1.35 level for some time.
Fundamentals from Europe are unlikely to have any significant impact on markets, as the latest inflation report only highlight the necessity of further action from the central bank. At the same time, inflation data, unemployment claims, manufacturing index and the FOMC meeting are all likely to push the Dollar lower this week.
© Dukascopy Bank SA