Browsing: EUR/USD Forecast

EUR/USD was pressured by a stronger dollar, Draghi, and Italian headlines. What’s next? PMI data stand out in the first week of December. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.

Italy remained a source of concern as the European Commission wants to bring forward disciplinary measures against the country. On the other hand, ministers in the continent’s third-largest economy have been more conciliatory and are willing to compromise. In the US, the Fed remains on course to raise rates in December and beyond. Moreover, Trump has toughened his stance on trade, and this supports the safe-haven USD.

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

  1. Manufacturing PMI’s: Monday: 8:15 for Spain, 8:45 for Italy, final French figure at 8:50, final German one at 8:55, and final euro-zone number at 9:00. Markit’s forward-looking purchasing managers’ index for Spain’s manufacturing sector stood at 51.8 in October, only slightly above the 50-point threshold that separates expansion from contraction. Italy, the third-largest economy, had a score of 49.2 points, indicating a squeeze. The preliminary assessment for France for November stood at 50.7 points. Germany had a score of 51.6 and the euro-zone 51.5. The initial figures will likely be confirmed in the final read.
  2. Sentix Investor Confidence: Monday, 9:30. This broad survey of 2,800 investors and analysts disappointed in November with a fall to 8.8 points, albeit still in positive territory, indicating optimism. The fresh figure for December may further fall.
  3. Spanish Unemployment Change: Tuesday, 8:00. The fourth-largest economy still suffers from a high level of unemployment and its timely report about the number of the unemployed is watched closely. An increase of 52.5K was recorded in October, as the tourism season was winding down.
  4. PPI: Tuesday, 10:00. The Producer Price Index showed an increase of 0.5% m/m back in September. The figure for October will likely be more moderate. Prices at factory gates feed into consumer prices.
  5. Services PMI’s: Wednesday, 8:15 for Spain, 8:45 for Italy, final French figure at 8:50, final German one at 8:55, and final euro-zone number at 9:00. Services sector numbers have generally been better than those in the manufacturing one. Spain had a score of 54 in October. Italy had 49.2. The initial read for France for November stood at 55, for Germany it was 53.3 and for the euro-zone 53.1. No changes are expected in the final versions.
  6. Retail Sales: Wednesday, 10:00. Consumers fell short of expectations for many months this year. Retail sales remained unchanged in September. A moderate rise is likely in October.
  7. German Factory Orders: Thursday, 7:00. The euro zone’s locomotive saw an increase of 0.3% in factory orders back in September. The figure for October will likely see another modest increase.
  8. German Industrial Production: Friday, 7:00. Similar to factory orders, also industrial output rose at a modest pace: 0.2% in September.
  9. French Industrial Production: Friday, 7:45. Contrary to Germany, the continent’s second-largest economy saw a substantial drop in its output back in September: 1.8%. A bounce is likely now.
  10. French Trade Balance: Friday, 6:45. France suffers from a chronic trade deficit. This deficit stood at 5.7 billion euros in September. A similar figure could be seen for October.
  11. GDP: Friday, 10:00. According to the previous releases, the euro-zone grew by a meager 0.2% q/q in Q3. Germany’s contraction and Italy’s stagnation weighed. We will now get an update which will likely confirm the previous publications.

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar dropped below 1.1300 (mentioned last week) and struggled to recover.

Technical lines from top to bottom:

1.1650 was a swing low in late August and is very closely followed by 1.1615 which played a pivotal role.

1.1500 is a very round level and also capped the pair’s advance in early November. 1.1430 separated ranges during October and later capped the pair in late November.

1.1325 was a low point in mid-November. 1.1300 is a round number that held the pair in mid-August and late October |double-bottom) and also held the pair down in June 2017.

1.1215 is the low point it reached in November. Lower, we are back to levels last seen in 2017. 1.1110 was a low point back in June. 1.1025 was a stubborn cap back in May 2017.

I am bearish on EUR/USD

The European Central Bank may end QE as expected but a rate hike is still far away. On the other side of the Atlantic, the Fed is keen on raising rates despite some bumps in the economy.

Our latest podcast is titled Are stocks free falling or is it a buying opportunity?

Follow us on Sticher or iTunes

Further reading:

Safe trading!

Get the 5 most predictable currency pairs

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

1 2 3 4 5 52