EUR/USD perspective for the week ahead

EUR/USD posted 1.2555 local high this week, but retraced on Friday. Some analysts started to talk about EUR/USD reversal, as the pair bounced back down from 100- and 200-months simple moving averages. I do not see any fundamental background for such a reversal scenario. Eurozone economy is strong and there are talks about ECB to lower the Quantitative Easing program and start tightening cycle much faster than it was previously expected. Further bearish slide is possible, but buyers should step-in with huge volume in the range of 1.2250-1.2375, the same way that they were doing three weeks in a row. Next week economic calendar is full of European reports, which might confirm the economy strength and support the pair. Two main releases influencing the pair are FOMC and ECB meeting minutes. If the first one will ease the chances for 4 rate hikes this year in U.S. and if the second will confirm rumors for faster ECB actions, EUR/USD will reach 1.2700 level in very nearest future.

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