The Euro gained strength against the U.S dollar during last week’s trading session after the greenback came under pressure after the Federal Reserve lowered both its U.S. growth forecast and its interest-rate projections on Wednesday, prompting investors to push back expectations on the timing of an initial rate hike.
Fed Chair Janet Yellen said the central bank wanted to see “more decisive evidence” of sustained growth before raising rates, but acknowledged that the economy has “expanded moderately” after a weak first quarter.
However the single currency remained under pressure ahead of the approaching deadline for Greece’s repayments to the International Monetary Fund at the end of the month.
A default by Greece could lead to the country’s exit from the euro zone.
Europe wants Greece to make spending cuts in order to secure a deal that will unlock €7.2 billion in bailout funds and prevent Athens defaulting on its debts when its bailout expires at the end of the month.
On Friday the European Central Bank extended extra emergency liquidity to Greek lenders as outflows from banks continued.
EUR/USD’s rise from 1.0818 support resumed last week even though upside momentum was weak. So far, the development suggests that rise from 1.0461 is still intact. Our estimated pivot level is at 1.1204 support and we will be buying the pair as long as the level holds. Break of 1.1466 resistance will target 38.2% retracement of 1.3993 to 1.0461 at 1.1810. At this point, such rise is viewed as a corrective move and we’d expect strong resistance from 1.1810 to bring reversal. On the downside, below 1.1204 minor support will turn focus back to 1.0818 support instead.
In the week ahead, euro zone ministers are to hold talks in Brussels on Monday to discuss the crisis in Greece.
The euro zone is to release data on private sector growth on Tuesday, while the week will also bring what will be closely watched reports on the U.S. factory and housing sectors, Core durable goods and Final GDP.