Browsing: EUR/USD Forecast

EUR/USD jumped 1.2% last week, as the euro took advantage of weakness in the U.S. dollar. The upcoming week features PMIs and the ECB rate decision. Here is an outlook at the highlights and an updated technical analysis for EUR/USD.
Investors remain pessimistic about economic conditions in Germany and in the eurozone. German GfK Consumer Climate came in at -22.8, while the all-eurozone indicator dipped to -23.5 points. Eurozone CPI slipped to 0.8%, down from 1.0% a month earlier. This marked the weakest gain since November 2016. 
There was disappointing news out of the U.S., as retail sales contracted in September. The headline reading declined by 0.3%, after a gain of 0.4% in the previous release. Core retail sales declined 0.1%, missing the estimate of 0.2%. There was no relief from the manufacturing front, as Philly Fed Manufacturing Index dropped to 5.6 in October, compared to 12.0 points a month earlier.

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

  1. Consumer Confidence: Wednesday, 14:00. The eurozone consumer remains pessimistic about the economic outlook. The indicator has come in at -7 for five successive readings and no change is expected in the upcoming release.
  2. PMIs: Thursday, 7:15 for France, 7:30 for Germany, euro-zone number at 8:00. These are the initial releases for services and manufacturing PMIs. In France, both PMIs dipped in August, with readings of 51.6 and 50.3, respectively. Little change is expected in September. Germany’s manufacturing PMI slipped to 41.1, pointing to deep contraction. The estimate for September stands at 52.0. The services PMI dropped to 52.5 points and is projected to dip to 52.0. The eurozone releases mirrored the German data, with the services PMI slowing to 52.0, while the manufacturing PMI dropped to 45.6 points. The manufacturing PMI is forecast to improve to 46.0, while the services PMI estimate stands at 51.9.
  3. ECB Rate Decision: Thursday, 11:45. The ECB is expected to maintain monetary policy and keep the main financing rate pegged at 0.00%. Mario Draghi’s tenure at the ECB draws to a close at the end of October, and investors aren’t expecting any significant remarks from the ECB chair.
  4. German GfK Consumer Climate: Friday, 6:00. Consumer climate improved to 9.9 in September, up from 9.7 a month earlier. The October forecast stands at 9.8 points.
  5. German Ifo Business Climate: Friday, 8:00. The September release improved slightly to 94.6. Business Climate has been on a slow but steady decline – in September 2018, the index stood at 103.7 points. The estimate for October is 94.5 points.

EUR/USD Technical analysis

Technical lines from top to bottom:

We begin with resistance at 1.1515, which 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 is next.

1.1290 has held in resistance since the first week of July.

1.1215 is under pressure in resistance.

1.1119 (mentioned last week) is providing support. 1.1025 is next.

1.0950 is providing support.

1.0829 has held in support since April 2017.

I remain bearish on EUR/USD

Sentiment towards the euro remains weak, as the U.S. economy continues to outperform the eurozone. Soft global conditions have hampered the manufacturing sector in Germany and the rest of the bloc.

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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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