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EURUSD: Holding above the 10-week moving average

The Euro fell last week, after the European Central Bank (ECB) cut back its inflation and growth targets but implied it may expand its quantitative easing programme (QE).

The ECB revised Gross Domestic Product (GDP) growth for 2015 down to 1.4% from 1.5%. Meanwhile the growth target for 2016 dropped to 1.7% from 1.9% and the target for 2018 dropped to 1.8% from 2%.

The US dollar slipped last week under pressure from renewed uncertainty about the timing of the Federal Reserve’s (Fed) plan to raise ultra-low interest rates after mixed signals of US jobs data.

Since the start of the year the currency fell more than 6.5% and is still in an accumulation phase, trading above the 10-week moving average. Last week the EURUSD went back and forward without any clear direction with a narrow range, closing in the red near the open of the week, creating a doji pattern. The stochastic is showing a slight bearish momentum but is still above the 50 mid line.

Expecting an upward move to a weekly key resistance at 1.1534 on a bounce from an upward trend line at 1.1005 (scenario 1) or a break above the weekly resistance at 1.1534 could push the currency up to 1.2041 (scenario 2).