If not the most important benchmark to measure the growth and power of both the European and USA’s economy, the EURUSD chart is definitely one of the most important. Some months ago, when I was writing about the euro and Eurozone, I decided to emphasize on fundamentals and end the article with a technical analysis supporting the fundamentals.
Everything seemed to be fairing good for the Eurozone and the Euro itself: fundamentals, numbers and technicals. As I mentioned earlier though, in my 13th of March article, I was expecting a correction of the Euro rally, especially at that point in time. The Eurozone economy is forecasted to grow 2.2 percent this year on average, and 1.8 percent next year. The Economic sentiment indicator (ESI) and sentiment in the EU have remained broadly stable. Labour markets are improving and supporting domestic demand, unemployment keeps falling while employment growth stability and credit growth have been recovering. Also, governments within the Eurozone are reducing their debt ratios. These are factors that indicate sure growth in the Eurozone. From my perspective everything seems to be normal and going as planned. If we have a closer look on the technical side of the EURUSD chart you can clearly see that the support level (green line) acted once more as a valid support level and managed to keep the rate above. A break below 1.15 (support level) could cause a dive to lower rates, rates we haven’t seen for almost a year for EURUSD. A Combination of technical along with fundamentals, from my point of view at the moment, do not leave a margin of doubt that the price will go down, as we need to see an indication from the price action to start thinking dovish. So, as long as the support level of 1.15 is holding the price I would expect buyers, after that correction, to drive the rate at higher levels again. Next resistance levels 1.2560, 1.2750 and then the upper boundary of the channel (blue line).
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