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 made a move to the upside but eventually failed to stay there and retreated amid the ECB meeting. What’s next? Final inflation figures and a key German survey stand out. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.

The ECB raised its growth forecasts but the optimism was confined to GDP and not inflation. The euro initially rallied but then retreated, as the door to more bond-buying is still wide open. Forward-looking PMIs support the notion that the euro-zone economies will continue outperforming, but the ECB seems to be waiting to see the white in inflation’s eyes. In the US, the Fed raised rates as expected but two members voted against a hike as inflation remains stuck. This hurt the dollar temporarily as the advances on tax reform and upbeat retail sales data helped the greenback.

Updates:

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

  1. Final CPI: Monday, 10:00. The initial read for euro-zone inflation was OK on the headline: 1.5%. However, core inflation remains stuck at 0.9% y/y in November, causing worries for the ECB. A confirmation of these figures is on the cards now.
  2. German Ifo Business Climate: Tuesday, 9:00. IFO is Germany’s No. 1 Think-tank and the survey has a lot of influence. The headline business climate score advanced to 117.5 points in November, beating expectations. A small tick up to 117.6 is forecast now.
  3. German PPI: Wednesday, 7:00. The Producer Price Index in the euro-zone’s largest country rose by 0.3% in October, indicating slightly stronger inflation in the pipeline. A more modest rise of 0.2% is predicted now.
  4. Current Account: Wednesday, 9:00. Similar to the narrower trade balance figure, the euro-zone’s current account surplus is based on Germany’s surplus. After +37.8 billion in September, the surplus for October carries expectations for a narrower 33.4 billion.
  5. Belgian NBB Business Climate: Wednesday, 7:00. Despite originating from a small country, Belgium’s NBB measure is a bellwether of the whole continent. A positive score of 1.6 was seen in November, above expectations. Yet another improvement is projected: 2.1 for December.
  6. Consumer Confidence:  Thursday, 15:00. The official 2300-strong survey by Eurostat has been gradually improving and does not show a negative view anymore: it reached a round 0 in November, striking a balance between optimism and pessimism.
  7. German GfK Consumer Climate: Friday, 7:00. Germany leads the euro-zone via its exports, not consumer spending. However, also consumers are becoming more optimistic with gradual rises in this survey. A score of 10.7 was reported in this survey back in November and a minor increase to 10.8 is on the cards for December.
  8. French Consumer Spending: Friday, 7:45. Consumers in the second-largest economy decreased their buying by 1.9% in October. The fall is seen as temporary as a jump of 1.5% is on the cards now.

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar had a positive start to the week, moving up and hitting resistance at 1.1860 (mentioned last week). The gains did not hold and the pair eventually returned to lower ground.

Technical lines from top to bottom:

The cycle high of 1.2090 looms above. 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.

The 2016 high of 1.1620 slowed down the pair also in October. 1.1555 was the low point in November and works as a cushion. It is followed by the round number of 1.15.

1.1445 is the June 2017 peak and immediate resistance. The next level of support is only 1.1370.

I turn from neutral to bullish on EUR/USD

After the pair wobbled amid all the noise from central banks, the week before the holidays could provide an opportunity for the euro to move up within the range. The Fed may change course in 2018 and the euro-zone’s higher growth expectations support a gradual rise.

Our latest podcast is titled A December to remember for EUR/USD

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