Browsing: EUR/USD Forecast

EUR/USD slipped over 1 percent for a second straight week. There are eight events in the upcoming week. Here is an outlook at the highlights and an updated technical analysis for EUR/USD. 
Eurozone industrial production ended the year on a sour note, falling 2.1% in December. This was weaker than the estimate of -1.8% and marked the second decline in three months. German Preliminary GDP for Q4 came in flat, shy of the estimate of 0.1%. The final reading for GDP in Q3 was 0.1%.
In the U.S., Powell outlined to the Senate Banking Committee the Fed’s strategy in case of a financial crisis. Powell said that the Fed had two tools to fight a recession – quantitative easing, which involves large purchases of assets, and forward guidance, which means communicating with the markets about the likely future course of interest rate policy. Powell said that the Fed stood ready to use both these tools “aggressively should the need arise to do so”.
Inflation remained at low levels in January. CPI dipped to 0.1%, its lowest level in five months. Core CPI edged up to 0.2%, up from 0.1%. Retail Sales stayed unchanged at 0.3%, matching the forecast. The core reading slipped from 0.7% to 0.3%, also matching the estimate.

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

  1. German ZEW Economic Sentiment: Tuesday: 10:00. The indicator climbed to 26.7 in January, up from 10.7 in the previous release. Another strong reading is expected in February, with an estimate of 20.0 points. The all-eurozone indicator jumped to 25.6 in January, with the February release expected at 21.3 points.
  2. Eurozone Current Account: Wednesday, 9:00. The current account surplus has widened in each of the past five releases, with a surplus of EUR 33.9 billion in November. This was shy of the estimate of EUR 34.3 billion. The upswing is expected to continue in December, with a forecast of EUR 34.5 billion.
  3. German GfK Consumer Climate: Thursday, 7:00. Consumer confidence improved to 9.9 in January, up from 9.6 points. No change is expected in the February release.
  4. French Final CPI: Thursday, 7:45. Consumer inflation in the eurozone’s second-largest economy improved to 0.4% in December, marking a four-month high. Analysts are braced for a sharp downturn in January, with a forecast of -0.4%.
  5. ECB Monetary Policy Meeting Accounts: Thursday, 12:30. The minutes will provide details of the most recent policy meeting. At the meeting, ECB President Christine Lagarde said that she would prefer higher interest rates, but that stronger growth and inflation were needed first. Investors will be combing through the minutes, looking for hints regarding future monetary policy. 
  6. Eurozone Consumer Confidence: Thursday, 15:00. The eurozone consumer remains pessimistic, as the indicator has been mired in negative territory. The indicator is expected to remain at -8 points for a third straight month.
  7. Flash PMIs: Friday, 8:15 in France, 8:30 in Germany, and 9:00 for the whole eurozone. The January PMIs showed growth in the services sector, but pointed to continuing contraction for German and eurozone manufacturing PMIs. Both of these manufacturing PMIs are expected to weaken in the initial estimates for February, with estimates of 47.4 and 44.8, respectively.
  8. Eurozone Inflation: Friday: 10:00. Consumer inflation in the eurozone remains well below the ECB inflation target of around 2 percent. The final estimates for February are expected to confirm the initial estimates of 1.1% for CPI and 1.4% for core CPI.

EUR/USD Technical analysis

EUR/USD posted considerable gains at the end of the week, coming close to the 1.11 level.

Technical lines from top to bottom:

We start with resistance at 1.1215.

1.1119 has some breathing room in resistance.

1.1025 (mentioned last week) has switched to resistance after sharp losses by EUR/USD last week.

1.0925 is an immediate support level.

1.0825 is under strong pressure in support. 1.0690 is next.

The round number of 1.0600 follows.

1.0520 is the final support level for now.

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I remain bearish on EUR/USD

The euro has had a dreadful start to 2020, falling 3.5% since the New Year. With few bright spots in the euronzone economy, there is more room for the currency to fall.

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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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