Browsing: EUR/USD Forecast

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EUR/USD made another step towards 1.50 this week, breaking a resistance line. This week, PMI numbers dominate its calendar. Here’s an outlook for this week’s events in the Euro-zone, and an updated technical analysis for EUR/USD.

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

EUR/USD Forecast October 2009

The rise of EUR/USD was hurt by a very disappointing ZEW Economic Sentiment report last week. CPI was inline, and didn’t show any inflationary pressures. Many of the upcoming week’s events are on Friday. Let’s review them:

  1. German PPI: Germany has show initial signs that it is getting out of deflation with a surprising rise of 0.5% in last month’s PPI. This time, it’s expected to get back to “normal” and remain unchanged. Published on Tuesday at 6:00 GMT.
  2. Current Account: The overall European balance surprisingly turned positive last month, and showed a surplus of 6.6 billion. IT was the first time in 18 months. This time, expectations are already positive at 4.3 billion. Published on Thursday at 8:00 GMT.
  3. Belgium NBB Business Climate: Although coming from one of the Euro-zone’s smaller countries, this composite index is highly regarded and is based on a broad survey of 6000 businesses. This indicator has been negative, meaning worsening conditions, since April 2008, though improving in recent months. After posting -17.8 points last time, it’s predicted to rise to -15.3. Published on Thursday at 13:00 GMT.
  4. French Consumer Spending: Europe’s second largest economy has disappointed with falling spending by its consumer in the past two months. After falling by 1% last month, economists expect a rise of 0.1%. Published on Friday at 6:45 GMT.
  5. French Flash PMI: The initial releases for the purchasing managers’ indices are first published in France, then in Germany, and then for all of Europe.French Flash Manufacturing PMI already passed the critical 50 mark and is expanding. Last month’s 53 points are expected to be followed by an even better score of 53.3 points this time. Also the French services sector is doing well, and reached 53.2 points. It’s now expected to rise to 54 points. Published on Friday at 7:00 GMT.
  6. German Flash PMI: In Germany, Europe’s largest economy, Flash Manufacturing PMI is sill behind, and still shows contraction, at 49.6 points. It’s expected to go over the top and rise to 50.2 points. The services sector is doing better, and already reached 52.1 points. It’s expected to rise modestly to 52.5 points. Published on Friday at 7:30 GMT.
  7. All-European Flash PMI: The figures for the whole of Europe are more similar to Germany’s numbers: Flash Manufacturing PMI is still under 50, at 49.3, and is expected to rise to 50.2. Flash Services PMI is already expanding at 50.9 points, and is predicted to rise up to 51.4 points. Note that all these PMI numbers have been going slowly and steadily up in recent months. Published on Friday at 8:00 GMT.
  8. German Ifo Business Climate: This survey of 7000 businesses is highly regarded. The “Information and Forschung” institute has show a steady rise in the business climate since February. It’s now expected to continue rising, from 91.3 to 92.1 points. Published on Friday at 8:00 GMT.
  9. Industrial New Orders: The value of Purchase Orders has risen very nicely in the past two months, with a 2.6% rise last month. This time it’s expected to rise by 1.2%, continuing to enjoy recovery. Published on Friday at 9:00 GMT.

EUR/USD Technical Analysis

EUR/USD had a good start, and on Tuesday it broke the 1.4844 level which capped it in recent weeks. It then struggled under 1.4908 but broke it shortly. The rest of the week was mixed. EUR/USD ranged between 1.4843 and 1.4967, reaching both points twice before closing at 1.4899.

So, I’m deleting the 1.4908 line from last week’s EUR/USD Outlook. EUR/USD erased it during the second part of the week. 1.4844 turns from a resistance line to a support line now. Below that, the far 1.4444, which held EUR/USD low for many months is far down. Minor support lines appear before that.

Looking up, I’m marking 1.4967, reached twice this week, as a resistance line.  Further up, the first mention worthy resistance line is at 1.5144 which was a support line for a short time at the beginning of 2008.

The next resistance line is at 1.5283, and this one is already major: it was the support line of EUR/USD for a long time in 2008, until the crisis began.

My sentiment continues to be slightly bullish on the Euro. The steady recovery is seen in steady moves upwards.

I bring a few excellent technical analyses for this popular pair:

I’ll link to additional posts later on, as they are published.

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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