The week wrapped up with the FOMC minutes of the November policy meeting. The minutes showed that officials did not believe any changes were needed to the current bond-purchase scheme of $120 billion/month. At the same time, they were of the opinion that “circumstances could shift to warrant such adjustments.”
- German CPI: All Day. Inflation remains weak in the eurozone’s largest economy. Inflation rose 0.1% in October, after three straight declines. Analysts are bracing for a decline of -0.7% in November.
- Manufacturing PMIs: Monday, 8:15 in France, 8:30 in Germany, and 9:00 for the whole eurozone. German and eurozone manufacturing PMIs continue to point to expansion, and the estimates of 57.9 and 53.6 are expected to confirm the initial readings. Spain and Italy are expected in just above the 50-level, which points to stagnation. France is projected to come in at 49.2, almost identical to the initial releases, which is in contraction territory.
- Eurozone Inflation Report: Tuesday, 10:00. Inflation remains low, as the eurozone economy remains in a weak state. Headline inflation is expected in at -0.2%, while the core inflation forecast stands at 0.2%.
- German Retail Sales: Wednesday, 7:00. Retail sales slumped in September, with a reading of -2.2%. This marked a 5-month decline. However, a rebound is projected for October, with a consensus of 1.1%.
- Services PMIs: Thursday, 8:15 in France, 8:30 in Germany, and 9:00 for the whole eurozone. The services sector has been in contraction, as business activity has been hit hard by the Covid-19 pandemic. The second-estimate PMIs for Germany and the eurozone are expected to confirm the initial readings, at 46.2 and 41.3, respectively.
- Retail Sales: Thursday, 10:00. Eurozone retail sales fell by 2.0% in September, worse than the estimate of -1.4%. Better news is expected in October, with an estimate of 0.6%.
- German Factory Orders: Friday, 10:00. Factory orders slowed to just 0.5% in September, down from 4.5% beforehand. The forecast for October stands at 1.1%.
EUR/USD Technical analysis
Technical lines from top to bottom:
We start with resistance at 1.2240.
1.2136 is next.
1.2046 is an important monthly line of resistance.
1.1936 is the first level of support.
1.1877 switched to support after strong gains by EUR/USD last week.
1.1744 is next.
1.1648 (mentioned last week) is the final support level for now.
I am bullish on EUR/USD
Despite weak economic conditions in the eurozone, the euro continues to make inroads against the US dollar. The momentum could continue this week, with the euro within striking distance of the symbolic 1.20 level.
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