Euro gains ground and heads for $1.07

Euro rose in European trade on Monday against a basket of major rivals, extending gains for the second session and moving away from five-month lows on active short-covering.

The pair is approaching the $1.07 barrier in wait for many important European and US later today, which will impact the path of trading throughout the week., 

Many analysts still expect the EUR/USD pair to fall until $1.05 amid concerns about the widening US-Eurozone interest rate gap starting next June, when European rates are expected to fall while US rates are expected to hold. 

The Price 

EUR/USD rose 0.15% today to $1.0671, with a session-low at $1.0649, after rising 0.1% on Friday, the second profit in three days away from five-month lows at $1.0601. 

The pair has snagged a 0.15% profit last week on short-covering.

The $1.07 Barrier 

Many strategic experts are looking for the $1.07 barrier as an important litmus test for the pair moving forward. 

Traders await a batch of important data this week, including the services and manufacturing PMI data for Europe and the US, in addition to US GDP growth and personal spending data.

The Interest Rate Gap

The current US-Eurozone interest rate gap stands at 100 basis points and could very well widen to 125 basis points in June. 

EUR/USD Outlook

City Index’s analysts maintained their expectations of downward movement for the EUR/USD pair, with a potential support at $1.0600, followed by $1.0500.

Some analysts even estimate a potential return towards $1.0450, however it would require some short–term correction.