Browsing: EUR/USD Forecast

EUR/USD showed limited movement last week, posting slight gains. The upcoming week has six events, including the ECB rate decision. Here is an outlook at the highlights and an updated technical analysis for EUR/USD.
German and eurozone manufacturing PMIs remain mired in contraction territory, as the November readings were 44.1 and 46.9, respectively. The services sector is in better shape, as the PMI readings were above the 50-level, which points to expansion. Other data pointed downwards – eurozone retail sales declined by 0.6%, while German industrial production fell by 1.7%.
In the U.S., there were no surprises from PMI reports, which showed expansion in the services sector, while the manufacturing industry continues to contract. In November, the ISM Manufacturing PMI ticked lower to 48.1, while the Non-Manufacturing PMI slowed to 53.9 pts. There was better news on Friday from key employment reports. Nonfarm payrolls soared to 266 thousand, up from 128 thousand a month earlier. Wage growth remained steady at 0.2%, just shy of the forecast of 0.3%. As well, the unemployment rate dropped from 3.6% to 3.5%. This beat the forecast of 3.6%. On the consumer front, UoM Consumer Sentiment climbed to 99.2, up sharply from 95.7 a month earlier.

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

  1. German Trade Balance: Monday: 7:00. Germany posts surpluses on a regular basis. In September, the surplus widened to EUR 19.2 billion, up from 18.1 billion. Another strong reading is expected in October, with an estimate of 19.0 billion.
  2. Sentix Investor Confidence: Monday, 9:30. The index continues to point to pessimism on the part of investors. The decline slowed to -4.5 in November, compared to -16.8 in October. The estimate for December stands at -5.4 pts.
  3. German ZEW Economic SentimentTuesday, 10:00. This key indicator is also pointing to pessimism on the part of investors and analysts. However, the decline slowed to -2.1 in November, compared to -22.8 a month earlier. Analysts expect a small gain in December, with a forecast of 1.1 pts.
  4. German Final CPIThursday, 7:00. German inflation remains weak, which is dragging on inflation levels in the eurozone. Final CPI is expected to confirm the initial estimate of -0.8%.
  5. Industrial Production: Thursday, 10:00. This manufacturing indicator slowed to 0.1% in September, down from 0.4% a month earlier. Investors are braced for a decline of 0.2% in October.
  6. ECB Rate DecisionThursday, 12:45. The ECB has pegged interest rates at a flat 0.00% since March 2016, and no change is expected in the upcoming release. Investors will be paying close attention to the rate statement, as the tone of the statement could impact on the movement of EUR/USD.

EUR/USD Technical analysis

Technical lines from top to bottom:

1.1390 has held firm in resistance since June. This is followed by 1.1345.

1.1290 was last tested in early July. 1.1215 is next.

1.1119 switched to resistance in early November.

1.1025 (mentioned last week) remains relevant and is currently an immediate resistance level. 1.0925 is next.

1.0829 has held in support since April 2017.

1.0690 is the final support level for now.

I am bearish on EUR/USD

Economic activity in the eurozone remains soft, and the German locomotive is also showing signs of weakness. With the U.S. economy in much better shape, the euro could have trouble attracting investors.

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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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