The Euro seems to be gaining strength it can hold onto. It was stuck in a well held range for the past two weeks, uncertain about any direction. With France’s new President Macron promising a lot of hope and an upbeat economic view that’s gaining supporters, France may have helped the Euro find a direction along with the US’s strengthening economy.
The US economy is still strong even with a less than exciting NFP report, and The Fed is still eyeing a rate hike. A strong US economic outlook signals hope that the Euro can gain some strength with the US being one of France’s top trading partner and with the EU overall. The EU has the biggest trade surplus with the US, so it can confidently benefit from a stronger US economy. The COT report for the Euro has turned into a slightly bullish trend with two weeks of net long positions as some bears took profit Mid-April and others slowing leaving the market, presumably a reason why it had been ranging for a while with bulls trying to outnumber the bears in net positions. If all heads well for the EU and the strength it’s trying to hold onto, it could head up to a long-term resistance at 1.14 held since March 2015. With the Euro appreciating in value as the US needs to exchange currencies for their large trade deficit with the EU, the Euro could head up more with the possibility of breaking the 1.14 long term resistance.
By checking in to next week’s starting price with a possible continuation of uptrend strength coupled with a watchful eye on future COT Reports, my sentiment would turn short term bullish for the pair and Euro overall if 1.14 is broken.