The European single currency slipped in the week through May 22 on downbeat economic data, dovish comments from Executive Board member Benoit Coeure, fall in European bond yields and renewed worries from Greece.
-German investor confidence fell to its lowest level in five months in May, and business confidence fell for the first time in seven months in May on growth worries after the ease in the first quarter’s growth.
Euro area PMI composite of manufacturing and services fell to a three-month low of 53.4 from 53.9 in April, yet the improvement in France’s business activity lowered losses in the euro.
-Executive Board member Benoit Coeure said the ECB would ramp up its bond-buying in the coming six weeks (May and June) on prediction of a decline in liquidity over the summer.
ECB Draghi called for structural reforms from European governments to help the recovery brought on by the ECB’s QE, yet a week before he said the ECB would keep its stimulus program “as long as needed” until inflation objective is improving on a sustained basis.
-German 10-year bond yields, and European bond yields, posted its first weekly drop in five.
-The talks between Merkel and Hollande with Greek Prime Minister Alexis Tsipras ended without reaching a deal.
Merkel has warned that an agreement must be reached before the end of the month.
The risk of default rises, as Greece cannot repay debt installment to the International Monetary Fund due on June 5 unless it unlocks a 7.2 billion euro aid disbursement.
This week, the euro area lacks important economic data, where more focus will be given to the G7 finance ministers meeting in Germany starting on Wednesday.
-The pair has did a downside correction close to 50% Fibo, as indicated by the weekly chart, where it has found some support as it approached the 50% Fibo support located at 1.0960.
-For this week, EURUSD is likely to face key resistance at 1.2050 and key support at 1.0257.
-The pair may resume its drop as long as it remains above this week’s pivot point located at 1.1155.