The EUR/USD is copying the pattern from previous days. Following a volatile European session, the bloc currency orbited around the 1.3300 figure on Wednesday, closing the day at 1.3315, 0.01% down on the day. In the last three sessions, the pair has been trading between 1.3265 and 1.3365, almost unchanged.
Earlier in the morning, better-than-expected Consumer Confidence in the eurozone was not enough to add more impetus to the euro, which remains locked in a tight range. Later, the U.S. House of Representatives approved a suspension of the debt ceiling until May 19. The Republican-controlled chamber passed the bill by a 285-144 margin.
But with the lack of any real economic data on the session, EUR/USD has stalled once again ahead of 1.3400 psychological resistance. "The barrier should prompt the single currency to retrace some momentum back to 1.3100 in the medium term," comments FXstreet.com analyst Richard Lee. "The figure remains a key doorway to a potential slump back to 1.2900."
Are We Ready For A EUR/USD Dip? Lee thinks that the EUR/USD is keeping a bullish tone on 1.3305 support. "However, the single currency remains widely in a range, trapped between resistance at 1.3400 and support via the 1.3250 figure," Lee says. "A break above or below, respectively, is required before any directional bias can be established."
As for the short term, next resistances are seen at 1.3350, 1.3375 and 1.3400, while supports could be found at 1.3280, 1.3260/50 and 1.3220.
The EUR/USD Keeps In The Red Around 1.3300... Ahead Of PMI
The bloc currency hovered around the 1.3300 figure on Wednesday as it failed to break above the 1.3350 resistance area and instead, saw a quick setback toward a weekly low of 1.3263 during the New York session.
According to J. Saettele, Senior Technical Strategist at DailyFX, "A yearlong bottoming pattern has been confirmed as complete and the first EUR/USD objective isn't until above 1.3800 (61.8% of decline from 2011 high and where the rally from the 2012 low would consist of 2 equal legs)."
In this line, the Economics Research Team at Goldman Sachs has changed its EUR/USD forecast to 1.4000 "flat over the next 3 and 6 months, from 1.2500 and 1.3300 previously -- spot has pushed through our previous forecasts as the euro area risk premium was unwound, and we expect this to continue."
"Several benchmarking exercises suggest a move to EUR/USD 1.40 is likely, but we would assume that euro area and ECB policymakers would respond to currency appreciation beyond that level. Aside from political issues, the external balance of the euro area remains in a very solid position, which stands in contrast to the situation in the U.S., and this relative picture is positive for EUR/USD," the team adds.
On the fundamental area, the EUR/USD might use the eurozone PMIs schedule for tomorrow. BK Analyst Kathy Lien considers that there is a potential EUR/USD breakout on the PMI. "Concern about eurozone growth is why tomorrow's PMI numbers are so important because they will provide a more accurate assessment of actual business activity."
"Both service and manufacturing sector PMI are expected to increase, which would lend support to the euro," Lien adds, "However, if the PMI reports show a deeper contraction [...] the EUR/USD could break its range low of 1.3264."
Otherwise, the euro could have enough reasons to head north.