Browsing: EUR/USD Forecast

EUR/USD enjoyed a quiet week and posted slight gains. The upcoming week features manufacturing and services PMIs. Here is an outlook at the highlights and an updated technical analysis for EUR/USD.
German investors were less pessimistic than expected in November. The indicator improved to -2.1, compared to -22.8 a month earlier. German Preliminary GDP posted a gain of 0.1% in the third quarter, above the estimate of -0.1%. The initial estimate for eurozone GDP remained steady at 0.2%, matching the forecast. On the inflation front, eurozone Final CPI ticked lower to 0.7%, down from 0.8%.
In the U.S., last week’s highlights were consumer inflation and spending reports. CPI improved to 0.4%, above the estimate of 0.3%. This was the strongest monthly gain since March. The core reading ticked higher to 0.2%, up from 0.1%. This matched the estimate. Retail sales reports were mixed. Retail sales rebounded with a gain of 0.3%, up from -0.3% a month earlier. This beat the estimate of 0.1%. The core reading improved to 0.2%, up from -0.1%. However, it missed the forecast of 0.3%.

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

  1. ECB Financial Stability Review:  Monday, 9:00. This report will provide details about the stability of the financial system. Investors will be looking for hints regarding future monetary policy.
  2. Current Account: Tuesday, 9:00. The current account surplus rose to EUR 26.6 billion in August, up from EUR 20.5 a month earlier. The surplus is expected to drop to EUR 22.3 in September.
  3. ECB Monetary Policy Meeting Accounts: Thursday, 12:30. The European Central Bank releases its monetary policy accounts four weeks after the rate decision. Investors will be looking for clues as to future monetary policy.
  4. Consumer Confidence: Thursday, 15:00. The Eurozone consumer remains weak, and the indicator dipped to -8 pts in September. The estimate for October stands at -7 pts.
  5. German Final GDPFriday, 7:00. The German economy contracted in the second quarter by 0.1%, as the eurozone continues to struggle. The estimate for Q3 stands at 0.1%.
  6. PMIs: Thursday, 8:15 for France, 8:30 for Germany, eurozone number at 9:00. These are the initial releases for services and manufacturing PMIs. The Services PMIs continue to point to expansion in France, Germany and the eurozone, but the same cannot be said about manufacturing, which has been hit hard by weak global conditions. Manufacturing PMIs are projected to be in contraction territory in the eurozone and Germany. The estimate for France is better, with an estimate of 50.9 pts. This points to stagnation.

EUR/USD Technical analysis

Technical lines from top to bottom:

1.1390 has held firm in resistance since June. 1.1345 is next.

1.1290 was last tested in early July. This is followed by 1.1215.

1.1119 (mentioned last week) switched to resistance in early November.

1.1025 is an immediate support level. 1.0925 is next.

1.0829 has held in support since April 2017.

1.0690 is the final support level for now.

I am bearish on EUR/USD

The U.S. economy remains in decent shape and continues to outperform the eurozone. We’re likely to see weak manufacturing reports this week out of the eurozone and Germany, which could weigh on the euro.

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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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