Browsing: EUR/USD Forecast

EUR/USD recorded strong gains last week, climbing close to one percent. There are seven events in the upcoming week, including PMIs and German GDP. Here is an outlook at the highlights and an updated technical analysis for EUR/USD. 
German GDP bounced back in the third quarter, with a gain of 8.5%. This follows a decline of 9.7% in Q2. German Ifo Business Climate slowed to 90.7, down from 92.7 beforehand. In France, GDP jumped 18.7% in Q3, beating the forecast of 18.2%. French consumer spending rose to 3.7% and CPI climbed to 0.2%, which were higher readings than the previous month.
In the US, PMIs for October indicated stronger growth in the manufacturing and services sectors. Services PMI improved to 57.7, as the index accelerated for a seventh straight month. Manufacturing PMI climbed to 56.7, up significantly from 53.3 beforehand. Both PMIs were well into expansionary territory, which indicates that the economic recovery continues to gain traction. Unemployment claims climbed for a second straight week, with a reading of 778 thousand. This was much higher than the estimate of 732 thousand. Durable goods orders reports were mixed. The headline figure slowed to 1.3%, down from 1.9%. However, the core release climbed from 0.8% to 1.3%.

The week wrapped up with the FOMC minutes of the November policy meeting. The minutes showed that officials did not believe any changes were needed to the current bond-purchase scheme of $120 billion/month. At the same time, they were of the opinion that “circumstances could shift to warrant such adjustments.”

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

  1. German CPI: All Day. Inflation remains weak in the eurozone’s largest economy. Inflation rose 0.1% in October, after three straight declines. Analysts are bracing for a decline of -0.7% in November.
  2. Manufacturing PMIs: Monday, 8:15 in France, 8:30 in Germany, and 9:00 for the whole eurozone. German and eurozone manufacturing PMIs continue to point to expansion, and the estimates of 57.9 and 53.6 are expected to confirm the initial readings. Spain and Italy are expected in just above the 50-level, which points to stagnation. France is projected to come in at 49.2, almost identical to the initial releases, which is in contraction territory.
  3. Eurozone Inflation Report: Tuesday, 10:00. Inflation remains low, as the eurozone economy remains in a weak state. Headline inflation is expected in at -0.2%, while the core inflation forecast stands at 0.2%.
  4. German Retail Sales: Wednesday, 7:00. Retail sales slumped in September, with a reading of -2.2%. This marked a 5-month decline. However, a rebound is projected for October, with a consensus of 1.1%.
  5. Services PMIs: Thursday, 8:15 in France, 8:30 in Germany, and 9:00 for the whole eurozone. The services sector has been in contraction. as business activity has been hit hard by the Covid-19 pandemic. The seconnd-estimate PMIs for Germany and the eurozone are expected to confirm the initial readings, as 46.2 and 41.3, respectively.
  6. Retail Sales: Thursday, 10:00. Eurozone retail sales fell by 2.0% in September, worse than the estimate of -1.4%. Better news is expected in October, with an estimate of 0.6%.
  7. German Factory Orders: Friday, 10:00. Factory orders slowed to just 0.5% in September, down from 4.5% beforehand. The forecast for October stands at 1.1%.

EUR/USD Technical analysis

Technical lines from top to bottom:

We start with resistance at 1.2240.

1.2136 is next.

1.2046 is an important monthly line of resistance.

1.1936 is the first level of support.

1.1877 switched to support after strong gains by EUR/USD last week.

1.1744 is next.

1.1648 (mentioned last week) is the final support level for now.

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I am bullish on EUR/USD

Despite weak economic conditions in the eurozone, the euro continues to make inroads against the US dollar. The momentum could continue this week, with the euro within striking distance of the symbolic 1.20 level.

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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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