Browsing: EUR/USD Forecast

EUR/USD enjoyed another strong week and posted gains of 0.70%, coming close to the 1.20 level. This week’s events are the ECB rate decision and PMIs. Here is an outlook at the highlights and an updated technical analysis for EUR/USD.

Eurozone Retail Sales rebounded in February with a sizzling gain of 3.0%. This marked a 7-month high. German ZEW Economic Sentiment underperformed, slipping from 76.6 to 70.7 in April. This was well off the estimate of 79.1. Eurozone CPI posted a gain of 1.3% in March, up from 0.9% a month earlier.

In the US, CPI rose in March, but the reaction of the US dollar was muted. Headline CPI climbed from 0.4% to 0.6% and Core CPI improved to 0.3%, up from 0.1%. Retail sales soared in March – headline retail sales came in at 9.8% and the core reading rose 8.4%, well above the forecast.

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

  1. ECB Rate Decision: Thursday, 11:45. The ECB is expected to maintain current policy. The market will be focusing on the rate statement and looking for any comments on inflation or the emergency pandemic program.
  2. PMIs: Friday, 7:15 in France, 7:30 in Germany, and 8:00 for the whole eurozone. Manufacturing continues to show strong expansion. Germany is leading the way, and the estimate for the April Manufacturing PMI stands at 65.8. The estimate for the eurozone stands at 62.0. The services sector has been lagging behind, due to the ongoing lockdowns in Western Europe. The estimate is 51.1 for Germany and 49.1 for the eurozone. The 50-level separates contraction from expansion.

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Technical lines from top to bottom:

We start with resistance at 1.2258, an important monthly level.

1.2089 has been a strong resistance line since the start of March.

1.1994 is an immediate resistance line.

1.1849 (mentioned last week) is the first support level.

1.1784 is next.

1.1664 has held in support since November 2020.

1.1585 is the final support level for now.

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I am neutral on EUR/USD

The euro has posted strong gains of late, but has not been able to cross above the 1.20 level. The eurozone remains gripped by Covid, but the vaccine rollout is expected to speed up after a dismal performance so far.

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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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