Browsing: EUR/USD Forecast

EUR/USD recorded a fourth straight losing week and fell close to the symbolic 1.10 level. There are seven events in the upcoming week. Here is an outlook at the highlights and an updated technical analysis for EUR/USD. 
German economic expectations rose sharply in January, to 26.7, up from 10.7 in December. This was the highest level since 2015. The all-eurozone release showed a similar trend, climbing to 25.6, up from 11.2 pts. The ECB maintained interest rates at 0.00%. German Services PMI jumped to 54.2 in December, a 5-month high. This beat the estimate of 53.0 pts. German Manufacturing PMI also improved in December, but remained in contraction mode, below the 50-level. The PMI accelerated to 45.2, its strongest level since May. In the eurozone, Manufacturing PMI improved to 47.8, while Services PMI dipped to 52.2 pts.
In the U.S., it was a relatively light week. Unemployment claims came in at 211 thousand, lower than the estimate of 214 thousand. The indicator has now beaten the forecast for a third straight week. The manufacturing PMI slowed in January, coming in at 51.7 pts. This marked a 3-month low and missed the forecast of 52.4 pts. There was better news in the services sector, as services PMI improved from 52.2 to 53.2, which was above the estimate of 52.9 pts. This marked a 10-month high.

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 been improving and reached 96.3 in December, up from 95.0 a month earlier. The upswing is expected to continue in January, with an estimate of 97.1 pts.
  2. German GfK Consumer Climate: Wednesday, 7:00. Consumer climate dipped to 9.6 in December, down from 9.7 a month earlier. The estimate for January stands at 9.6 pts.
  3. Monetary Data: Friday, 9:00. M3 Money Supply remained unchanged at 5.6% in November. The estimate for December stands at 5.5%. Private Loans has been fairly steady in recent months and was unchanged at 3.5% in November.
  4. German Preliminary CPI: Thursday, All Day. German consumer inflation rebounded with a gain of 0.5% in December after a decline of 0.8% in the previous release. Another decline is projected in January, with an estimate of -0.6%. 
  5. German Retail Sales: Friday, 7:00.This consumer spending indicator has been showing sharp swings of late. After a decline of 1.9% in October, retails sales rebounded with a sharp gain of 2.1% in November. The estimate for December stands at -0.5%.
  6. Spanish Flash GDP: Friday, 8:00. GDP slipped in the third quarter to 0.4%, its lowest level since 2014. Another gain of 0.4% is expected in Q4.
  7. Eurozone Inflation: Friday, 10:00. The initial estimate for January CPI is projected at 1.4%, just above the 1.3% gain in December. The initial core release is expected at 1.2% in January, compared to 1.3% in December.

EUR/USD Technical analysis

EUR/USD ended the week with losses, falling to a low of 1.1023 in the Friday session. This was the pair’s lowest level since December 2.

Technical lines from top to bottom:

1.1390 has held firm in resistance since June.

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

1.1119 has some breathing room in resistance.

1.1025 (mentioned last week) is fluid, as EUR/USD starts the week just below this line.

1.0925 is providing support.

1.0829 has held in support since April 2017.

1.0690 is the final support level for now.

.

I remain bearish on EUR/USD

The eurozone economy continues to struggle, while the US. economy is performing well. The recent outbreak of the coronavirus which originated in China has spooked investors, which has boosted safe-haven assets such as the U.S. dollar.

Follow us on Sticher or iTunes

Further reading:

Safe trading!

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

1 2 3 56