Browsing: EUR/USD Forecast

EUR/USD recorded slight losses last week. The upcoming week features confidence indicators and PMIs. Here is an outlook at the highlights and an updated technical analysis for EUR/USD. 
Eurozone industrial production declined by 0.1% in February, after a strong gain of 2.3% a month earlier. On the inflation front, Eurozone CPI came in at 0.7%, while the core reading showed a gain of 1.0 percent. This confirmed the initial readings.
In the U.S., consumer spending was down sharply in March. Retail sales declined by a staggering 8.7%, worse than the estimate of an 8.0% decline. The core reading fell by 4.5%, beating the forecast of 4.9 percent. The employment market remains in disarray, as employment claims topped the 5-million mark. On the manufacturing front, the Philly Manufacturing Index plunged to -56.6, compared to -12.7 a month earlier. This was weaker than the estimate of -30.0 points.

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

  1. Eurozone Trade Balance: Monday, 9:00. The eurozone’s trade surplus narrowed to EUR 17.3 billion in January, down from EUR 22.2 billion a month earlier. This missed the estimate of EUR 19.3 billion. The surplus is projected to improve to EUR 19.2 billion in February.
  2. German ZEW Economic Sentiment: Tuesday, 9:00. Institutional investors were deeply pessimistic in March, as the indicator plunged to -49.5 points, down from +8.7 points in February. Another weak reading is expected, with an estimate of -40 points. The all-eurozone indicator slipped to -49.5 in March and the April forecast stands at -38.2 points.
  3. Eurozone Consumer Confidence: Wednesday, 14:00. The eurozone consumer remains pessimistic about economic conditions. The indicator slipped to -12 in March, down from -7 a month earlier. The downturn is expected to continue in April, with an estimate of -20 points.
  4. German GfK Consumer Climate: Thursday, 6:00. German consumer confidence slowed to 2.7 points in February, down from 9.8 in January. This was well short of the estimate of 7.4 points. The March estimate stands at -2 points.
  5. PMIs: Thursday, 7:15 in France, 7:30 in Germany, and 8:00 for the whole eurozone. Services PMIs continue to indicate deep contraction and weakened in March. In April, the German PMI is projected to come in at 29.0, the eurozone PMI is expected at 24.9 and the French PMI at 25.1 points. Manufacturing PMIs have been stronger, with readings near the 40-level, but this still points to contraction. In April, the eurozone PMI is expected at 39.4, the German PMI at 39.0 and the French index at 37.9 points.   
  6. German Ifo Business Climate: Friday, 8:00. Business confidence dipped to 86.1 in March, down from 87.7 a month earlier. This missed the estimate of 87.9 points. We now await the April release.

EUR/USD Technical analysis

Technical lines from top to bottom:

We start with resistance at 1.1215, which has held since mid-January. 1.1119 is next.

1.1025 (mentioned last week) has some breathing room in resistance.

1.0900 is an immediate resistance level. It could see action early next week.

1.0829 is providing support.

The round number of 1.07 is next.

1.0620 is protecting the 1.06 level. It is the final support level for now.

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I remain bearish on EUR/USD

The eurozone economy has been hard hit by the Corvid-19 virus, especially Italy and Spain. EUR/USD is down 1.4% in April. Economic numbers are expected to worsen in April, as this month’s data will reflect the Covid-19 outbreak, which hit Europe in March. This does not bode well for 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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