Last week was one for the dollar, which strengthened against the euro by more than 4 cents, erasing the last two weeks of the euro rises against the dollar. The dollar's strength was based on several factors.
Analyzing the EUR / USD pair last week pointed out that the euro has no basis for further growth, without strong macroeconomic data from the Euro zone. In addition, quite a large ransom and reach the zone of strong opposition supported the supply side. Last week's declines were the confirmation of this thesis. Weak readings from Germany and visible slowdown in the EU are starting worrying. Shortness of breath main EU economy could translate into other Member States. The case of Greece is still not resolved and it should be remembered that Greece at the beginning of June may be bankrupt! Writing about the situation in Europe should quote the words of the members of the ECB who have declared their greater buying bonds under the program.
Last Wednesday we met with the FOMC meeting notes. Members of the Fed not undo the interest rate hikes this year, with an emphasis on further macro readings. On Friday, we met a very good readability of base CPI in the US, which will increase expectations for interest rate hikes in the future.
Forecast for Monday:
After a very strong decline we consider the variant with a small correction, which will be a momentary pause before further declines. The currency pair reached the zone 1,10-1050 support levels, which in March and April were strong resistances. Therefore, after Friday's declines should expect a correction in the vicinity of 1,1060-90 and then the supply side should once again attack the 1.10 level. Breaking this level will open the way towards level 1.0880 and then 1.0815.
In an alternative version penetration levels of 1,1060-90 will lead to break the current and allow for increases to the level of 1.1165. However, at present this is not the preferred option.
The preferred option in the medium term. It remains the further strengthening of the dollar.
Note: tomorrow we do not have important data from the Euro-zone, while the US is Memorial Day, which could lead to stronger moves, due to poor liquidity in the market. You should be prepared for having it in your strategy.
I encourage everyone to comment and wish you many successful investments.