EUR/USD: Next Lower Target At 1.0520?
The U.S. dollar continued to move higher last week, boosted additionally by weakness in the euro and British pound. The pound sterling slid towards 1.2620 after the dovish Bank of England turn and the euro fell to its 1.0660-support area. Generally, we now prepare for a next leg lower towards 1.05 in the EUR/USD. We will wait for a break below 1.0630 in order to sell euros towards 1.0520 (orange ellipse).
Overall, we entered the summer doldrums when volatility is low due to thin liquidity and holiday-related conditions. Therefore, traders should not expect too much, trade with smaller positions, take profits even earlier or take a summer trading break.
This week, the only interesting pieces of economic data releases will be Wednesday’s final U.S. Q1 GDP report and Friday’s U.S. core PCE release. The PCE index has recently stalled around 2.8 percent, which is still well above the Federal Reserve’s target of 2 percent. Another unchanged print could therefore increase pressure on the Fed to leave interest rates unchanged for longer, which would be positive for the greenback.
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