Browsing: EUR/USD Forecast

EUR/USD continues to show volatility and declined by 1.3%. It was the euro’s worst week since late August. The upcoming week has 7 events. Here is an outlook at the highlights and an updated technical analysis for EUR/USD.
The PMI readings for services and manufacturing were all within expectations, pointing to contraction in manufacturing but expansion in the services sector. German manufacturing PMI came in at 42.1, as the country’s manufacturing sector continues to sputter.
In the U.S., there was good news from the services sector, which continued to show expansion in October. Services PMI improved to 54.7, above the estimate of 53.5 points. The UoM Consumer Sentiment index dipped to 95.7, shy of the forecast of 97.0 points. There was a significant development on the trade front, as a Chinese report stated that the U.S. and China had agreed to phase out tariffs. However, no timetable was given.

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

  1. Spanish Parliamentary Election: Sunday, All Day. Spaniards are off to the polls for the second time this year. With no clear front runner, the result could lead to political instability in the eurozone’s fourth-largest economy.
  2. German ZEW Economic Sentiment: Tuesday, 10:00. This key confidence indicator remains mired in negative territory. The index dipped to -22.5 in October, but is expected to improve to -13.2 in November. The all-eurozone index is also expected to improve to -11.5, up from -23.5 points.
  3. German Final CPI: Wednesday, 7:00. German inflation remains subdued and is expected to improve to 0.1% ijn October, confirming the initial estimate.
  4. Eurozone Industrial Production: Wednesday, 10:00. The eurozone manufacturing sector has struggled, with this indicator posting two declines in the past three readings. Another decline is expected in September, with an estimate of -0.2%.
  5. German Preliminary GDP: Thursday, 7:00. The German locomotive contracted by 0.1% in Q2, and another decline of 0.1% is expected in Q3, which could weigh on the euro.
  6. Eurozone Flash GDP: Thursday, 10:00. This is the second estimate of GDP, and is expected to remain steady at 0.2% in September. This would confirm the initial estimate back in October.
  7. Eurozone Final CPI: Friday, 10:00. Eurozone inflation remains low, with the September release projected to drop from 0.8% to 0.7%. This would confirm the initial estimate.

EUR/USD Technical analysis

Technical lines from top to bottom:

1.1390 was a stepping stone on the way up in late January and capped EUR/USD earlier. 1.1345 is next.

1.1290 has held in resistance since the first week of July. 1.1215 is next.

1.1119 (mentioned last week) remains relevant.

1.1025 has switched to a resistance role after sharp losses by EUR/USD last week.

1.0950 is the first support level.

1.0829 has held in support since April 2017.

1.0690 is the final support level for now.

I am neutral on EUR/USD

The euro continues to show strong swings in both directions, making it difficult to establish a trend. The U.S. economy continues to outperform the eurozone, but recent rate cuts by the Federal Reserve has investors looking for alternatives to the U.S. dollar.

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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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