Browsing: EUR/USD Forecast

EUR/USD had a good week, regaining the losses of the previous week, and closing higher up its trading range. This week’s ZEW Economic Sentiment, inflation figures and other data will impact EUR/USD. Here’s an outlook for this week’s events in the Euro-zone, and an updated technical analysis for EUR/USD.

For the latest outlook, check out the section: EUR/USD  Forecast.

EUR/USD forex chart with support and resistance lines. Click to enlarge:

EUR/USD Forex chart

Absolutely no surprises in the rate decision last week kept the Euro in the trading range. Let’s see the menu for this week:

  1. German WPI: This price index measures goods sold by wholesales. Though it isn’t a major release, it precedes the CPI release by a few days. In addition, it’s the only release on Monday, standing out in a light calendar. German WPI surprised by rising by 0.7% last month. It’s now expected to rise in a moderate pace of 0.2%.
  2. French CPI: Europe’s second largest economy has seen prices go up and down in previous months, without a clear direction. After a rise of 0.5%, French CPI is expected to fall by 0.1% this time. Published on Tuesday at 6:45 GMT, just before more important releases.
  3. ZEW Economic Sentiment: The ZEW institute from Germany publishes this highly regarded survey of investors and analysts. Its German indicator is considered more precise than the all-European figure. Both are published at the same time – Tuesday at 9:00 GMT.The German sentiment has been positive since April, reach a high score of 57.7 last month. It’s expected to edge up to 58.8 this month. The all-European number is slightly better, at 59.6, and is expected to pass the 60 mark this time.
  4. Industrial Production: After falling in the last two months, Europe’s industrial production is expected to rise neatly – 0.9% this time. Expectations are built on the German and French releases that were already made earlier. Published on Wednesday at 9:00 GMT.
  5. ECB Monthly Bulletin: This collection of statistical data is what ECB policymakers see when they make decisions. These reports also contain analysis for future economic conditions and the future policy. Released on Thursday at 8:00 GMT.
  6. CPI: Despite being released after the German and French CPI releases, this inflation number is still very important and does surprise economists occasionally. Europe’s deflation is no secret: CPI fell in the last three months. Last month’s 0.2% fall (annually adjusted) is predicted to be followed by a 0.3% drop this time. A rate hike won’t be seen soon. Core CPI is positive, but prices are hardly rising. Core CPI is expected to edge down from 1.3% to 1.2% this time. Released on Thursday at 9:00 GMT.
  7. Jean-Claude Trichet speaks: ECB President moved the markets just last week, and he’ll get a chance to do that again, in a speech called “Lessons from the Crisis”. He’ll start talking on Thursday at 11:25 GMT.
  8. Trade Balance: Similar to previous data, also the all-European trade balance is released after the German and French releases. Yet again, this number was very surprising last time – a surplus of 6.8 billion was reported, more than 5 times the expectations. This time, economists predict a rise to 7.9 billion.

EUR/USD Technical Analysis

The Euro made a nice and steady rise during the week. It climbed up to 1.4764, easily breaking the minor resistance line of 1.4720 from last week’s EUR/USD Outlook. It then slipped back down before climbing as high as 1.4817. EUR/USD finally closed at 1.4731.

EUR/USD is closing a month of range trading, since it broke the 1.4444 long-standing resistance line. 1.4444 continues to be the strong support line of this range. Below that, support is found at 1.42.

Looking up, I’ve modified the resistance next resistance line to be 1.4850, which is the peak of this current range. This is a minor resistance line at the moment. Above that, 1.4908 looks stronger.

I continue to be slightly bullish on the Euro, which enjoys a solid recovery. Another week of range trading is quite possible before making another move up.

Like last week, I bring a few excellent technical analyses for this popular pair:

  • Moihammed Isah discusses the upside bias of EUR/USD and looks at the 1.4844 level.
  • Casey Stubbs writes about the caution needed before the next bullish move.

Further reading in Forex Crunch:

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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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