Browsing: EUR/USD Forecast

EUR/USD climbed to a 7-week high during the week, but was unable to consolidate and ended the week with slight losses. The key events this week are German retail sales and inflation data, as well as U.S GDP. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.

The Federal Reserve has been decidedly dovish since January, but the pessimistic message from the Wednesday policy meeting surprised the markets. The Fed’s rate outlook indicated that a majority of policymakers expected rates to stay on hold until 2020. This was in sharp contrast to the previous quarter’s forecast, in which the FOMC projected two hikes in 2019.

The rate statement was blunt, stating that economic activity “has slowed”. Policymakers singled out slower growth in household spending and business investment and noted that inflation has decreased due to lower energy prices. The Fed also announced that it would stop reducing its $4 trillion balance sheet by $50 billion a month. This move is intended to make monetary policy more accommodative and stimulate growth.

German and eurozone manufacturing PMIs continue to slide and are pointing to contraction. The German reading fell to 44.7, its lowest level in almost seven years. The eurozone release slowed for an eighth successive month. The manufacturing sector has been hit hard by the global trade war, which has taken a bite out of key eurozone imports, such as German cars.

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

    1. German Ifo Business Climate: Monday, 9:00. Business confidence has slowed for six successive months, as the eurozone and Germany remain gripped in an economic slowdown. The February reading came in at 98.5, and the March estimate stands at 98.7 points.
    2. Monetary Data: Tuesday, 9:00. M3 Money Supply dipped to 3.8% in January, shy of the estimate. The February forecast is forecast to edge up to 3.9%. Private Loans is projected to tick up to 3.3% In February.
    3. German GfK Consumer Climate: Wednesday, 7:00. Consumer confidence has held steady, with gains of 10.8 over the past two months. An identical reading is expected in the March release.
    4. German CPI: Thursday, All Day. German inflation rebounded nicely in February, with a gain of 0.5%. The forecast for March stands at 0.6%.
    5. German Import Prices: Friday, 7:00. Import prices have struggled, posting three straight declines, and missing the forecasts each release. The indicator is expected to rebound in March, with an estimate of 0.5%.
    6. German Retail Sales: Friday, 7:00. Retail sales soared in January, with a gain of 3.3%, above the estimate of 1.9%. However, the markets are braced for a decline of 1.0% in February.
    7. French Consumer Spending: Friday, 7:45. Consumer spending impressed in January, with a gain of 1.2%. The forecast for February is 0.2%.
    8. French CPI: Friday, 7:45. Inflation has been anemic, as the last gain was back in October. Investors are expecting a strong rebound in February, with a forecast of 0.9%.
    9. German Unemployment Change: Friday, 8:55. The labor market remains strong, as unemployment rolls continue to shrink. The January reading of 21 thousand marked a 5-month high. The estimate for February is -10 thousand.

EUR/USD Technical Analysis

Technical lines from top to bottom:

We start with resistance at 1.1750. Close by, 1.1720 is a veteran line that worked in both directions and it capped the pair in mid-September.

1.1620 has held in resistance since the start of October.

1.1570 is next.

1.1515 was a high point at the end of January. 1.1435 was a low point at the beginning of February.

1.1390 was a stepping stone on the way up in late January and capped EUR/USD earlier. 1.1345 remained relevant during the week.

1.1290 (mentioned last week) was breached in support late in the week, as EUR/USD dropped sharply.

1.1270 was a double-bottom in December 2018.

1.1215  which was the low-point in 2018. This is followed by 1.1119.

1.1025 was a cap back in May 2017.

1.0950 is the final support level for now.

I am bearish on EUR/USD

The eurozone continues to post lukewarm data and the ECB has said that it will not raise rates before 2020. With the U.S. economy in good shape, the euro will have trouble attracting investors until the eurozone data improves.

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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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