Despite the correction caused by the strengthening of the dollar after the publication of more positive data from the American labor market last Friday, EUR/USD remains positive and inclined towards further growth, which is facilitated by two strong fundamental factors - the stimulating policy of the Fed, as well as the program recently adopted by the EU leaders support for the European economy in the form of a package of expenditures for the economic recovery of the bloc in the amount of 1.8 trillion euros.
At the beginning of the European session on Wednesday, the pair resumed its growth after the correction and rose to resistance levels 1.1770 (ЕМА200 on the 1-hour chart), 1.1780 (38.2% Fibonacci level of the upward correction in the wave of the pair's decline from 1.3870, which began in May 2014).
In case of a breakdown of these resistance levels, it is likely that the upward dynamics will continue and the further growth of EUR / USD. The pair is traded in the area above the long-term important resistance level 1.1915 (ЕМА144 on the monthly chart). The tendency to further growth may lead EUR / USD to resistance levels of 1.2075 (ЕМА200 on the monthly chart), 1.2180 (50% Fibonacci level).
In the alternative scenario, and after the breakdown of the local support at 1.1712, the pair will continue to decline, first towards the support level 1.1573 (ЕМА200 on the 4-hour chart), and in case of its breakdown - to the support level 1.1285
(Fibonacci level 23.6%). A return to the zone below the support level 1.1210 (ЕМА200 on the daily chart) will mark the resumption of the bearish trend.
And this week investors will pay attention to the publication (on Friday at 09:00 GMT) of the updated data on the Eurozone GDP for the 2nd quarter.
According to the forecast of economists, the GDP of the Eurozone is expected to decrease in the 2nd quarter by -12.1% (-15.0% in annual terms) after an increase of +0.1% (+1.0% in annual terms) in the 4th Q1 2019 and a -3.6% decline (-3.1% YoY) in Q1 2020. The preliminary (first) estimate of the Eurozone GDP in the 2nd quarter also amounted to -12.1% (-15% in annual terms).
If the data turns out to be weaker than the first estimate, then the euro may decline. Data better than the first estimate may strengthen the euro in the short term, although it is still far from the full recovery of the European economy even to pre-crisis levels (quarterly growth within 0.2% - 0.4%).
Trading Recommendations
Sell Stop 1.1690. Stop-Loss 1.1810. Take-Profit 1.1645, 1.1573, 1.1520, 1.1420, 1.1390, 1.1285, 1.1210
Buy Stop 1.1810. Stop-Loss 1.1690. Take-Profit 1.1915, 1.1970, 1.2075, 1.2180
