Browsing: EUR/USD Forecast

EUR/USD posted slight losses last week. It’s a busy week, including PMIs, consumer inflation and the ECB rate decision. Here is an outlook at the highlights and an updated technical analysis for EUR/USD.

Voters in 28 EU countries went to the polls in an election for the European parliament. The results were dramatic, as far-right parties across Europe made gains at the expense of center-left and center-right parties. In France, Marine Le Pen’s National Rally party came in first, handing a stinging defeat to President Macron. In Germany, Chancellor Angela Merkel’s conservatives lost ground, and voters in the U.K sent a strong message to Labor and the Conservatives, as Nigel Farage’s Brexit party won the most seats.

The German locomotive has been showing signs of weakness, but the labor market has traditionally been a bright spot. However, unemployment rolls ballooned by 60 thousand in April, compared to the estimate of -8 thousand. The indicator has recorded consecutive declines for almost two years, and investors are hoping that the April spike was a one-time blip. However, if German employment numbers continue to miss expectations, the euro could lose ground.

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

https://www.tradingview.com/x/YjWLfeaP/

  1. Manufacturing PMIsMonday, 7:15 for Spain, 7:45 for Italy, final French figure at 7:50, final German one at 7:55, and final euro-zone number at 8:00. Spanish manufacturing improved to 51.8 points in April, but is expected to slow to 51.4 points. Italian manufacturing PMI improved to 49.1, indicative of contraction. The May estimate is 48.5. The French release improved to 50.0, and is projected to improve to 50.6. The German and eurozone releases remained mired in contraction territory, with scores of 44.4 and 44.9 points. Little change is expected in the May readings.
  2. Spanish Unemployment Change: Tuesday, 7:00. Unemployment rolls fell sharply in April, with a reading of -91.5 thousand. The estimate for May stands at -67.0 thousand.
  3. Inflation: Monday, 7:55. CPI flash estimate improved to 1.7% in April, above the estimate of 1.6%. The forecast for May stands at 1.4%. The core release climbed to 1.2% in April, but is projected to drop to 1.0% in May.
  4. Services PMIsMonday, 7:15 for Spain, 7:45 for Italy, final French figure at 7:50, final German one at 7:55, and final euro-zone number at 8:00. Spanish PMI dropped to 53.1, and is expected to slow to 52.5 in May. The Italian release dipped to 50.4. and is expected to contract in May, with a reading of 49.9. The French is projected to improve to 51.7, up from 50.5. The German and eurozone releases also expected to weaken in May, with scores of 55.0 and 52.5 points.
  5. Eurozone Retail Sales: Wednesday, 9:00. This consumer spending indicator dropped to 0.0% in March and the downturn is expected to continue in April, with an estimate of -0.5%.
  6. German Factory Orders: Thursday, 6:00. The indicator posted a gain of 0.6% in March, after four successive declines. The April estimate stands at 0.1%.
  7. Rate Decision: Thursday, 11:45. The ECB is expected to maintain interest rates at a flat 0.00%. Investors will be keeping a close eye on the tone of the rate statement. A dovish statement could send the euro lower.
  8. German Industrial Production: Friday, 6:00. The indicator posted a gain of 0.5% in March, crushing the estimate of -0.5%. The April estimate stands at -0.4%.
  9. French Industrial Production: Friday, 6:45. Industrial production declined 0.9% in March, marking a 4-month low. The markets are expecting a rebound in April, with an estimate of 0.3%.

* All times are GMT

EUR/USD Technical analysis

Technical lines from top to bottom:

1.1570 has held in resistance since mid-October.

1.1515 was a high point at the end of January. 1.1435 was a low point at the beginning of February.

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

1.1290 is the next resistance line. Close by, 1.1270 was a double-bottom in December 2018.

1.1215 has held in resistance since mid-May.

1.1119 (mentioned last week) was tested in support late in the week.

1.1025 was a cap back in May 2017.

1.0950 is the next support level.

1.0870 was a swing high in December 2017.

1.0820 is the final support line for now.

I am neutral on EUR/USD

The pair has been relatively quiet, and this lack of movement could continue. The direction of the pair could depend on the services and manufacturing PMIs – weaker than expected scores could weigh on 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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