EUR/USD renewed 5-month highs during the past week. German retail sales declined in February, and the March inflation readings though improved, were still quite weak. So, we see that the pair was driven up not by better fundamentals from Europe, but by US dollar weakness.
So far the European Central Bank has done nothing to make the euro go down. Next week’s most important event is Mario Draghi’s speech on Thursday, so be very careful with longs just ahead of the event. The trade-weighted euro is now 2% above its January 2015 level, when the easing program was launched, so Mario Draghi has reasons to try and talk the euro down.
Still, the main factor is: in order to make EUR/USD decline, bears need an increase in expectations of the Federal Reserve's rate hike. Comments of the Fed’s Chairwoman Janet Yellen were perceived as very bearish for the USD. At the same time, despite increase in unemployment, US labor market data was good, and the greenback has the need and the opportunity for correcting up. The FOMC meeting minutes next Wednesday and Yellen’s speech on Thursday will also be very important, because the recent statements of the Fed’s members were quite contradictory.
The bulls will retain power in case of a close above 1.14. Resistance is at 1.15 and 1.16. Support is at 1.1270, 1.1230 and 1.1150.