Browsing: EUR/USD Forecast

EUR/USD Forecast, Technical Analysis, Outlook ► preview of the major events that move Euro/Dollar during the week. Here are some general data. Scroll down for the latest EUR/USD forecast.

EUR/USD characteristics

Euro/dollar is the world’s most popular currency pair for both retail and institutional traders. 19 European countries that vary quite a bit from each other share the single currency. The key countries are Germany, France, Italy and Spain. The US dollar is the reserve currency of the world.

A wide trade surplus, originating mostly from German exports, means that funds are flowing into the euro area. When markets are calm, this influx pushes the common currency higher. However, the eurozone has its share of economic and political issues and speculation takes its toll.

The euro debt crisis engulfed Greece, Portugal, Ireland, Italy, and Spain. While the worst may be behind us, it is always looming. The leadership of the European Central Bank and President Mario Draghi helped stabilize and even save the euro. His “whatever it takes” speech in July 2012″ was a turning point. The diverse countries are linked by a monetary union but not a fiscal one, and this remains the Achilles heel.

EUR//USD trading is often choppy, especially when it is confined to narrow ranges. When the pair is in trend, past technical lines, even those from 2003, are respected quite nicely. €/$ has a “good memory”.

EUR/USD recent moves

The euro-zone economies are growing at a robust pace in 2017. Unemployment is falling and even core inflation is finally rising albeit temporarily All this has led to optimism that sent the euro higher.

The ECB will halve bond-buys to 30 billion euros from January 2018. However, it left the door open to extending the QE program beyond September, and this hurt the euro. A weaker euro makes exports more attractive and pushes imported inflation higher. Draghi is happy with growth but worried about inflation.

The political uncertainty in Germany is becoming an issue after inconclusive elections in September. A fresh round of elections joins the crisis in Catalonia and the political instability in Italy.

In America, hopes for fiscal stimulus faded early in the year, but are now on the rise again, with Trump’s tax plan. The Federal Reserve has maintained its plan for three rates hikes in 2017 despite lower US inflation.

Latest weekly EUR/USD forecast

EUR/USD had an excellent week that saw more volatility than the prior week with the pair hitting the highest levels in over three years. Is there more to come? Final inflation figures stand out in the week before the ECB decision. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.

The ECB meeting minutes delivered more action than usual: the document detailing the December meeting included a hint that the ECB may change its guidance about QE, perhaps pre-announcing the end of bond-buying already in the January meeting. This sent the euro higher. Apart from that, investor confidence, retail sales, and industrial production all beat expectations with only a few misses. In the US, the greenback suffered from worries that China will slow or halt buying of US treasuries. The half-denial from the Chinese authorities only partially helped the greenback. US inflation remains not-so-great. The technical behavior of EUR/USD was quite good.

Updates:

EUR/USD daily chart with support and resistance lines on it. Click to enlarge:

  1. Trade Balance: Monday, 10:00. The euro-zone enjoys a wide trade surplus thanks to Germany’s robust exports. This surplus stood at 19 billion euros in October and could rise now, as we already know that Germany saw a wider surplus in November and despite France’s wider deficit. A surplus of 22.4 billion is on the cards.
  2. German Final CPI: Tuesday, 7:00. The initial read for December showed a monthly rise of 0.6% in prices in Europe’s largest economy. The final read will likely confirm the initial read.
  3. CPI (Final): Wednesday, 10:00. The flash estimate of euro-zone CPI showed an OK figure on the headline: 1.4% y/y, in line with expectations. However, core inflation remained at 0.9%, below 1%, for the third consecutive month, showing that underlying inflation is still poor. The final read will likely confirm the initial estimate.
  4. Jens Weidmann speaks Thursday, 8:!5. The president of the German Bundesbank will make another public appearance. Will he provide a hint about an announcement about the end of QE? We know that he is a hawk, so making dovish remarks could have a bigger impact than hawkish ones. Nevertheless, his words could move markets.
  5. German PPI: Friday, 10:00. Producer prices missed in November by rising by only 0.1%, breaking a streak of figures coming out ahead of forecasts. Inflation in the pipeline, as reflected by PPI, still seems stronger than CPI. A rise of 0.2% is expected.
  6. Current Account: Friday, 10:00. Similar to the narrower trade balance figure, the wider current account measure is in a significant surplus. The figure for October was relatively low, with 30.3 billion, a miss on estimates. We could see a higher number in the read for November. A surplus of 31.3 billion is predicted.

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar dropped early on, but held the 1.1910 level (mentioned last week) very nicely. It then rebounded, topping 1.20.

Technical lines from top to bottom:

We start from higher ground this time. 1.2725 is high up in the sky but worth mentioning. 1.2480 which protects the 1.25 is next.

1.2280 was a stepping sone on the way down. 1.2215 was the fresh peak in January 2018.

The next levels to watch are 1.2280, which was a stepping stone on the way down.

The 2017 peak of 1.2090 remains important. 1.20 is the obvious round level and also worked as resistance in September.

1.1950 was the high level seen in November and a stepping stone towards 1.20. 1.1860 capped the pair in August and in October while working as support in September.

1.1820 worked as a cushion to the pair in late November and works as weak support. 1.1760 served as a cushion in November and also played a role beforehand.

1.1710 was the high of August 2015 and also worked as support in November. 1.1670 was a swing low in October. and hasn’t worked too well.

I remain bullish on EUR/USD

If the reports from China are correct, diversyfing away from US Treasuries will be beneficial for the euro, the second currency, the euro. In addition, the gradual advance of the ECB towards removing stimulus contrasts the Fed’s dilemma with low inflation.

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