Browsing: EUR/USD Forecast

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Happy new year EUR/USD traders! After two slow weeks, the action returns. The upcoming week is packed with economic indicators from a variety of fields. Here’s an outlook for the events that will move the Euro, and an updated and extended EUR/USD technical analysis for the first week of 2010.

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

EUR USD Forecast

There are many EUR/USD forecasts for 2010. Most of the ones I’ve collected see the dollar rise against the Euro. What do you think? Anyway, let’s start with the first week:

  1. Final Manufacturing PMI: Published on Monday at 9:00 GMT. The European manufacturing sector has shown improvement in recent months, with this indicator passing the 50 mark in October. Last month’s score of 51.2 points was followed by 51.6, which is expected to be confirmed now.
  2. Sentix Investor Confidence:  Published on Monday at 9:30 GMT. This survey of 2800 investors has shown that investor confidence has risen nicely in the old continent, but is still in the negative zone. The trend is expected to continue with this index rising from -5.5 to -3.4 points this month.
  3. German Unemployment Change: Published on Tuesday at 8:55 GMT. The number of unemployed people dropped in the past 5 months, beating economists’ expectations for a rise in unemployment, month after month. Also this time, economists expect a rise of 4,000 people, but there might be a good surprise once again – something that will push the Euro higher.
  4. CPI Flash Estimate: Published on Tuesday at 10:00 GMT. Inflation began showing signs that it’s picking up, after a long time of deflation. Last month’s rise of 0.5% in consumer prices was the first sign, and it’s expected to be followed by a 0.9% rise this time. Note that this data is fresh, relating to December, but not always accurate.
  5. Final Services PMI: Published on Wednesday at 9:00 GMT. This figure complements Monday’s manufacturing number.  The services sector is doing better, and is above the 50 point mark indicating expansion for already 4 months. The nice number of 53.7 is expected to be confirmed now.
  6. Industrial New Orders: Published on Wednesday at 10:00 GMT. Although being a late figure, relating to November, it’s quite moving for the Euro. After four strong months of growth, orders are predicted to dip by 0.9% this time.
  7. PPI: Published on Wednesday at 10:00 GMT. Contrary to consumer prices, European producer prices haven’t really picked up. Last month’s 0.2% rise is expected to be followed by a rise in the same scale this time.
  8. Retail Sales: Published on Thursday at 10:00 GMT. European retail sales haven’t risen in the past 6 months, disappointing again and again. After being unchanged last month, the same outcome is predicted this time. The predictions rely on German and French retail sales, so a big surprise isn’t expected here.
  9. Consumer Confidence: Published on Thursday at 10:00 GMT. 2,300 consumers are asked to rank the economic conditions. Eurostat showed that confidence has risen slowly, but is still in the negative zone, indicating consumer pessimism. Last month’s -17 is expected to be followed with -16 this time. Note that the ZEW economic sentiment survey was weak and this sent the Euro down.
  10. German Factory Orders: Published on Thursday at 11:00 GMT. Europe’s largest economy broke 7 months of expansion with a drop of 2.1% last month. This slowdown in orders hurt the Euro. Expansion is expected to return now, with a rise of 1.6%.
  11. German Retail Sales: Published on Friday at 7:00 GMT. German retail sales are precede the all-European number by almost a whole month. Last month, the volume of retail sales remained unchanged. A rise of 0.4% is predicted pushing the Euro higher.
  12. Unemployment Rate: Published on Friday at 10:00 GMT. Although the all-European unemployment rate is based on German and French numbers which are already out, this release is highly quoted by the media, and impacts policymakers. The rate ticked up by 0.1% each time in the past 4 months. Currently at 9.8%, it’s expected to rise again by 0.1% reaching 9.9%. If it rises to 10%, this will hurt the Euro, as this is a psychological barrier.
  13. Final GDP:Published on Friday at 10:00 GMT. Europe’s recession ended in Q3, with a rise of 0.4% in GDP. This rise is expected to be confirmed. Germany and France already showed growth in Q2.
  14. German Industrial Production:Published on Friday at 11:00 GMT. Similar to German factory orders, also industrial production dipped last month after a few positive months. The drop of 1.8% is expected to be followed by a rise of 1.1% this time, helping the Euro just before American Non-Farm Payrolls are due.

EUR/USD Technical Analysis

EUR/USD traded in a narrow range during the past holiday week. It went as high as 1.4459, a little bit above the resistance line, but this can be easily attributed to the thin trading. The bottom was at 1.4272.

Support and resistance lines haven’t changed since last week’s outlook. Immediate resistance appears at 1.4444. This was a firm resistance line during the summer and is strong now. After the Euro broke in September, it was supported at 1.4480, which serves as minor resistance.

Further above, 1.4626 worked as support in recent months, and is now a minor support line. Further above, 1.48 was the bottom border of a range that EUR/USD traded in. Even higher, 1.5144 was 2009’s high is a far and strong resistance line.

Looking down, 1.42 serves as immediate support. It was a stepping stone when the Euro rose in the summer, and was also tested about two weeks ago.

Further below, 1.40 is a round an psychological number and also worked as a resistance line in the past. The biggest support is at 1.3750. This worked as a major support and resistance line many times in the past.

I remain bearish on EUR/USD.

Now that everybody is back on the scene, range trading trading could be replaced with a move downwards. The advantage that the Eurozone’s economy had over the American economy is gone. This is seen in the American recovery as well as in the problems that appeared in Greece and in Spain.

This pair always receive excellent technical analysis on the web. Here are a few:

  • The Geek Knows brings a review of the past holiday week, and looks towards 2010 with an interesting technical analysis of the Euro.
  • Casey Stubbs‘ last EUR/USD post showed that there is serious pressure against the dollar bulls. I’m waiting for his recent analysis…
  • Kathy Lien shows that EUR/USD has usually fallen in January.
  • Joel Kruger (on DailyFX) brings a classical EUR/USD technical analysis.

I’ll add more as they are published.

Further reading:

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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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