Browsing: EUR/USD Forecast

EUR/USD tried to move higher but eventually closed the week on the lower ground. Where will the pair go now? Final euro-zone CPI stands out. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.

The European Central Bank’s meeting minutes did not add any clarity on the timing of the ECB’s rate hike next year but remained dovish in general. In the US, inflation is picking up as expected and the central bank remains bullish. Fed Chair Jerome Powell says he “sleeps well at night”. The US is readying new tariffs on $200 worth of Chinese goods, but the sides may resume negotiations. The US Dollar took advantage

Updates:

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

  1. Trade Balance: Monday, 9:00. The euro-zone enjoys a wide trade surplus, thanks to German exports. However, this surplus is set to continue shrinking in the report for May: to 17.6 billion from 18.1 billion beforehand. The impact of the trade wars will only be seen in the following week.
  2. Final CPI: Wednesday, 9:00. The initial CPI report for June showed a growing divergence between headline inflation and core inflation. Headline CPI stood exactly at the ECB’s target of 2% while core CPI was stuck at only 1%. Rising oil prices are responsible for a rapid rise in prices. The final figure will likely confirm the initial figures.
  3. German PPI: Friday, 6:00. Producer prices feed into consumer prices. Inflation at factory gates, or in the pipelines, rose by 0.5% m/m in May and is forecast to advance at a more moderate pace of 0.3%.
  4. Current Account: Friday, 8:00. Similar to the narrower trade balance report, the euro-zone’s current account is positive, It reached 28.4 billion in April and is predicted to squeeze down to 27.2 billion in May.

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar kicked off the week with a move to the upside, temporarily breaching the 1.1740 level mentioned last week. It then turned south.

Technical lines from top to bottom:

1.2060 was the low point in late April and it is the last barrier before the round number of 1.20.

The round number of 1.19 is also notable as a pivotal line in the range and it also temporarily held the pair back in late 2017. 1.1845 was the high point in early June.

Further down, the 1.1820 level was a stubborn support line in late 2017. 1.1790 capped the pair in mid-July 1.1750 is a low point recorded in mid-May.

1.1720 is a veteran line that worked in both directions, last seen in November. 1.1676 was a temporary low point in late May.

Lower, 1.1630 was a pivotal line in November and 1.1550 was the trough around that time.

Below, 1.1510 is the new 2018 low and also a ten-month trough. Further down, 1.1480 served as support back in July 2017.

I remain bearish on EUR/USD

Monetary policy divergence favors a stronger dollar and a weaker euro. With Trump still on course to further fight trade wars, it is hard to see the euro making any meaningful recovery.

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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

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