The Euro recovered a bit on Friday as the Dollar bulls took some profits out of the table, after the PCE data came softer than expected, despite the US economy grew at a faster-than-expected pace in the first quarter, up by 3.2% vs. the expected 2.1%. Market sentiment remains bearish on the single currency, as the economic imbalances between the US and the EU will likely keep favoring the Dollar. Traders will step into this upcoming week with a cautious stance, as today, the US will release core PCE inflation data. But the main event will be Wednesday’s FOMC meeting, as market participants will look for any clue if the higher GDP numbers had any effect on FED’s future monetary policy decisions.
The Euro closed with small gains on Friday after it found support around 1.1115 (S1) to close the week at 1.1139. The overall sentiment remains bearish, but the bulls will be attempting to retest the recent broken support 1.1185, which could be the new resistance level. A successful break through this area, could take the common currency higher towards 1.12 and possibly 1.1230 (R2). However, if the bearish momentum continues and 1.1115 (S1) is broken, then the next target for the bears would be 1.1050 (S2).
Support: 1.1115 / 1.1050
Resistance: 1.1185 / 1.1230