EUR/USD Forex Forecast - Strong Business Activity Reveals to the Eurozone Prevent Crisis
On Friday, the euro edged higher against the US dollar after a report showed that Euro Zone business activity picked up last month as growth accelerated in the bloc's dominant services industry, according to a survey, providing the latest piece of evidence that the currency union will avoid a recession.
The S&P Global Composite Purchasing Manager's Index (PMI), regarded as a good indicator of overall economic health, rose to an eight-month high of 52.0 last month, up from 50.3 in January, just shy of a preliminary reading of 52.3.
The EUR/USD is trading at 1.0608 at 12:30 GMT, up 0.0010 or +0.10%. The Invesco CurrencyShares Euro Trust ETF (FXE) closed at $97.79 on Thursday, down $0.59 or -0.60%.
In other news, a 50 basis point increase in the European Central Bank's deposit rate this month is a done deal, according to Reuters polled economists, who expected a 25 basis point increase next quarter to give a terminal rate of 3.25%.
A weaker US dollar is also helping the Euro. It fell as Treasury yields fell following Atlanta Fed President Raphael Bostic's less hawkish comments on Thursday. He advocated for continuing 25 basis point increases.
EUR/USD Technical Analysis
According to the daily swing chart, the main trend is down. However, momentum is increasing. A trade through 1.0533 will indicate that the downtrend has resumed. A break of 1.1033 shifts the main trend upward.
The minor trend is positive. This is a form of momentum control. A break of 1.0705 will confirm the trend. A break of 1.0566 will reverse the minor trend.
The Euro is currently trading near a minor pivot point of 1.0613. A long-term 50% level at 1.0661 is the nearest resistance. A main bottom at 1.0483 provides the closest support.
The reaction of traders to the minor pivot at 1.0613 will most likely determine the direction of the EUR/USD on Friday.
Bullish Scenario
A sustained move above 1.0613 suggests the presence of buyers. If this generates enough upward momentum, expect a surge into 1.0661, followed by 1.0705.
Bearish Scenario
A sustained move below 1.0613 indicates the presence of sellers. If this generates enough downside momentum, expect the selling to extend into the minor bottom at 1.0566, then the main bottom at 1.0533.