Browsing: EUR/USD Forecast

EUR/USD posted slight losses for a third consecutive week. The upcoming week features the ECB rate decision and December PMIs. Here is an outlook at the highlights and an updated technical analysis for EUR/USD. 
Final German CPI confirmed the initial estimate of 0.5%. The ECB released the minutes of its December meeting. Policymakers said that the bank stood ready to provide further stimulus to the eurozone economy in order to boost inflation, which remains well below the ECB target of 2 percent.
It was a busy week in the U.S. and key consumer releases were mixed. Retail sales, the primary gauge of consumer spending, were positive in December. The headline reading improved to 0.3%, up from 0.2% a month earlier. Core retail sales impressed with a gain of 0.7%, above the estimate of 0.5%. The strong numbers were a result of a late-holiday shopping spree by consumers. Consumer inflation has been losing ground and remains below the Federal Reserve target of 2.0 percent. The downturn continued in December. CPI slowed to 0.2%, compared to 0.3% a month earlier. Core CPI dipped to 0.1%, down from 0.2%.

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

  1. German ZEW Economic Sentiment: Tuesday, 10:00. After an extended streak of declines, investor confidence jumped in December to 10.7 pts. This figure easily beat the estimate of 1.1 pts. A reading above zero indicates optimism. The upward swing is expected to continue in January, with an estimate of 15.2 pts. The all-European index is projected to rise to 16.3, up from 11.2 in the previous release.
  2. ECB Rate Decision: Thursday, 12:45. The ECB Minimum Bid Rate has been pegged at 0.00% since March 2016 and no change is anticipated at the upcoming meeting. Analysts will be combing through the rate statement, looking for any hints with regard to future monetary policy.
  3. Consumer Confidence: Thursday: 15:00. The eurozone consumer remains pessimistic about economic conditions. The index has been steady and is expected to come in at -8 for a second straight month.
  4. PMIs: Thursday: 7:00. Monday, 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 Germany, France and the eurozone. The manufacturing sector is in worse shape, as the German and eurozone manufacturing PMIs pointed to contraction (44.6 and 46.9, respectively). French manufacturing PMI was almost unchanged, at 50.5 pts.

EUR/USD Technical analysis

EUR/USD ended the week with losses, falling to a low of 1.1086 in the Friday session. This was the pair’s lowest level since December 26th.

Technical lines from top to bottom:

1.1390 has held firm in resistance since June.

1.1290 was last tested in early July. 1.1215 is next.

1.1119 remains relevant. Currently, it is an immediate resistance line.

1.1025 (mentioned last week) is protecting the symbolic 1.10 level. 1.0925 is next.

1.0829 has held in support since April 2017.

1.0690 is the final support level for now.

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I am bearish on EUR/USD

EUR/USD has posted losses for three straight weeks. The U.S economy is in much better shape than that of the eurozone, so we could see the euro drop toward the 1.10 level, which has psychological significance.

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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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