Browsing: EUR/USD Forecast

EUR/USD was almost unchanged last week, as the pair ended the week just shy of the 1.22 line. There are six releases in the upcoming week. Here is an outlook at the highlights and an updated technical analysis for EUR/USD.

In Germany, GDP declined in the first quarter, with a read of -1.8%. Ifo Business Climate improved to 99.2 in May, up from 96.6. However, GfK Consumer Climate remains mired in negative territory and came in at -7.0 in May. France’s economy posted a small decline of 0.1% in Q4.

In the US, Conference Board Consumer Confidence Consumer Confidence held steady in May, at 117.2. This was down marginally from 117.5 in April. Second-estimate GDP for the first quarter came in unchanged at 6.4%, confirming the initial reading. Unemployment claims fell to a new post-Covid low of 406 thousand, down from 444 thousand. Durable goods orders disappointed with a reading of -1.3% in April, its second decline in three months. 

The PCE index, the Fed’s preferred inflation gauge, jumped to 3.6% in April, up from 2.2%. This could lift the US dollar if investors believe that the Fed will re-evaluate whether to taper QE sooner rather than later.

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

  1. German CPI: Monday, All Day. German inflation rose to 0.7% in April, above the forecast of 0.5%. CPI is expected to slow to 0.3% in May.
  2. Monetary Data: Monday, 8:00. M3 Money Supply slowed to 11.6% in March, down from 12.3%. The downswing is expected to continue in April, with a forecast of 9.5%. Private Loans rose to 3.3% in March and the estimate for April stands at 3.5%.
  3. Manufacturing Final PMIs: Tuesday, 7:50 in France, 7:55 in Germany, and 8:00 for the whole eurozone. Eurozone manufacturing continues to show robust growth. The final readings for April are expected to confirm the initial readings, which came in at 64.0 in Germany, 62.8 in the eurozone and 59.2 in France. The neutral 50-level separates contraction and expansion.
  4. Inflation Report: Tuesday, 9:00. Eurozone inflation has been accelerating in recent months. Headline CPI is projected to rise to 1.9% and Core CPI is expected to tick higher to 0.9%.
  5. Services Final PMIs: Thursday, 7:50 in France, 7:55 in Germany, 8:00 in the whole eurozone. The services sector continues to show expansion. The initial readings for April came in at 52.8 in Germany, the eurozone at 55.1 and France at 56.6. The final readings are expected to confirm the initial releases.
  6. Eurozone Retail Sales: Friday, 9:00. Retail Sales posted a strong gain of 2.7% in March. Will we see another gain in the April release?


Technical lines from top to bottom:

1.2412 (mentioned last week) is an important monthly resistance line.

1.2303 is next.

1.2242 switched to resistance after EUR/USD fell sharply on Wednesday.

1.2123 is the first support level.

1.2065 switched to support in mid-May when the euro started a strong rally.

1.1961 is the final line for now.


I am neutral on EUR/USD

Covid is slowly receding in Western Europe, as the vaccine rollout continues. In the US, a high inflation reading on Friday could renew speculation about tapering, which would be bullish for the US dollar.

Further reading:

Get the 5 most predictable currency pairs

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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