Browsing: EUR/USD Forecast

EUR/USD sustained its worst week since September, declining 1.1 percent. This week’s key events are German and eurozone GDP. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.

Soft data out of Germany and the eurozone weighed on the euro. Eurozone retail sales plunged 1.6% in January, its worst reading since December 2013. German manufacturing reports headed lower, raising concerns about the health of the eurozone’s largest economy. Factory orders slipped 1.6%, a second straight decline. Industrial production declined 0.4%, its sixth decline in seven months.

The European Commission economic forecasts projected moderate growth in the eurozone for 2019, but warned that significant uncertainties lie ahead. The bank revised downwards its growth forecast for the eurozone to 1.9% in 2018, from 2.1% in the November forecast. For 2019, the growth forecast has also been revised down to 1.5%, compared to 1.9% in the November forecast. Inflation slipped in late 2018 due to lower oil prices, with an average inflation level of 1.7%. Inflation is expected to dip to 1.6% in 2019. The report highlighted Brexit and the slowdown in China as key sources of uncertainty for European economies, adding that the projections were subject to downside risks.

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

  1. Eurozone Industrial Production: Wednesday, 10:00. The global trade war has dampened the eurozone manufacturing sector, and industrial production plunged 1.7% in November. Another decline is expected in December, with a forecast of 0.4%.
  2. German Preliminary GDP: Thursday, 7:00. GDP slipped 0.2% in the third quarter, shy of the estimate of -0.1%. The indicator is expected to rebound in Q4, with a gain of 0.1%.
  3. Eurozone Flash GDP: Thursday, 10:00. The eurozone economy has been slowing, and GDP fell to 0.2% in the third quarter. Another gain of 0.2% is projected in Q4.
  4. Italian Trade Balance: Friday, 9:00. Italy’s trade surplus improved to EUR 3.84 billion in November, crushing the estimate of EUR 2.89 billion. The estimate for December stands at EUR 3.47 billion.
  5. Eurozone Trade Balance: Friday, 10:00. The trade surplus jumped to EUR 15.1 billion in November, well above the forecast of EUR 13.2 billion. The upward trend is expected to continue in December, with an estimate of EUR 16.4 billion.

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar posted daily losses every day last week and broke below support at 1.1345 (mentioned last week), at the end of the week.

Technical lines from top to bottom:

1.1620 was a peak in the autumn and is the next line if the pair breaks above 1.1570, which was a swing high in the wake of 2019.

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 was a swing low in mid-January.

1.1290 was a low point around the same period of time. 1.1270 was a double-bottom in December 2018 and the 2018 low of 1.1215 is next.

This is followed by 1.1119. The final support level for now is 1.1046.

I am bearish on EUR/USD

The German and eurozone economies continue to produce weak numbers, underscored by weak scores in retail sales and manufacturing. Concerns over Brexit and the Chinese slowdown are likely to continue weighing 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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