USD might get room to gasp this week

Strong Fundamentals will lead the way
EUR/USD continues reaching historical highs. We’ve seen the pair get to 1.3818 but it hasn’t been able to maintain the price action above 1.3800. This week looks Greenback positive; however we expect euro bulls to continue buying every dip we see. There will come to point where we might see the pair heading quickly to 1.4000 or heading steadily day by day to a price below 1.3650 once again.

This week’s movements will be lead by fundamentals. We begin on Tuesday with CPI for the UK, followed by the release of the ZEW Surveys on Euro Zone and finally we have PPI and TICS for the US. All of this releases are predicted to go against the Euro and this way we begin a move that will give the USD some space to breath before they can capitalize on a bigger move to the downside. On Wednesday we have several important releases beginning with the Minutes of the latest BoE meeting; later that day we have an appearance by Ben Bernanke speaking about monetary policy so it will be important to keep an eye on what he says and how he explains the FED’s plan for the near future. Both these releases are very important to predict movements on future weeks however the appearance by Bernanke will surely have a immediate effect on the price action so it’s important to be focused on what he says and how the market reacts. Thursday is important due to the release or Leading Indicators and the Philly Fed report. Friday will be a calm day; we could see some dip buying by euro bulls due to the expected move to the south of our graphs during the week.

The technical side shows us a pair that has been going north for the past five weeks. We can see how it is loosing some steam due to historical high being so close and that is playing the role of a psychological barrier. We see that EUR/USD is now in overbought territory and with the help of fundamentals we could see the pair head a bit lower to latter on become get re-bought and continue the move to 1.4000 and higher before the year ends.

Have a nice week and please remember to focus and be patient.