Browsing: EUR/USD Forecast

EUR/USD showed small gains last week and recorded a weekly close above the 1.18 level for the first time since January 2018. There are three events in the upcoming week, including PMIs. Here is an outlook at the highlights and an updated technical analysis for EUR/USD. 
Eurozone Sentix Investor Confidence remained in negative territory, which indicate expansion. Still, the indicator improved from -18.2 to -13.4. German ZEW Economic Sentiment pointed to stronger investor confidence, climbing from 59.0 to 71.5. On the inflation front, German CPI declined by 0.5%, the second decline in three months. The week wrapped up with Eurozone GDP for Q2, with the second read of -12.1% confirming the first reading.
In the US, consumer inflation was unchanged at 0.6% in July. The core reading improved to 0.6%, up from 0.2% beforehand. There was good news on the employment front, as unemployment claims fell to 963 thousand, down from 1.186 million. This marked the first time that new claims have fallen below the 1-million mark since mid-March, before the spread of Covid-19. Retail sales reports were mixed. The core reading came in at 1.9%, above the estimate of 1.3%. However, the headline read posted a gain of 1.2%, shy of the estimate of 2.0%.

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

  1. Current Account: Wednesday, 8:00. The eurozone current account surplus fell to 8.0 billion, the third straight month that the surplus has narrowed. We now await the June data.
  2. Inflation Report: Tuesday, 9:00. Inflation climbed rose to 0.3% in June, up from 0.1%. The forecast for July stands at 0.4%. The core reading ticked lower from 0.9% to 0.8% in June. Analysts expect a rebound in July, with an estimate of 1.2%.
  3. PMIs: Friday, 7:15 in France, 7:30 in Germany, and 8:00 for the whole eurozone. In June, PMIs across the eurozone posted readings above 50, which indicates expansion. This trend is expected to continue in the July releases. German Manufacturing PMI is expected to come in at 52.2, the Eurozone PMI at 52.7 and the French indicator at 53.0.
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EUR/USD Technical analysis

Technical lines from top to bottom:

We start with resistance at 1.2174.

This is followed by 1.2004, just above the psychologically important 1.20 level.

1.1930 is next.

1.1850 is a fluid line. Currently, it is an immediate resistance line.

1.1725 is the first support line.

1.1650 has some breathing room in support.

1.1573 (mentioned last week) is next.

1.1470 has held since mid-March. It is the final support line for now.


I am neutral on EUR/USD

The US dollar continues to struggle and the euro has taken advantage, testing the 1.19 line earlier in August. However, US numbers have been showing some improvement, so the dollar could rebound.

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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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