Browsing: EUR/USD Forecast

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EUR/USD had a terrible week, reaching 6 month lows against the dollar, with the final push on Friday’s American GDP. The upcoming week is quite busy, with a rate decision being the highlight. Here’s an outlook for the upcoming 8 events in Europe and an updated technical analysis for EUR/USD.

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

Euro/Dollar forecast

As the first month of 2010 ends, the predictions for the EUR/USD seem correct at the moment – most forecasts saw the dollar gaining against the Euro. Let’s start the review. The technical analysis will follow:

  1. German Retail Sales: Publication time is unknown at the moment. Europe’s largest economy saw a very disappointing drop in this important indicator last month – a drop of 1.1%. German consumers aren’t so confident as they were a few months ago. A rise of 1.1% is predicted this time.
  2. Final Manufacturing PMI: Published on Monday at 9:00 GMT. The continent’s manufacturing sector has been expanding in the past 3 months – score above 50. Last month’s number was 52 according to the preliminary release, and it’s expected to be confirmed now.
  3. PPI: Published on Tuesday at 10:00 GMT. Contrary to consumer prices, European producer prices haven’t picked up. In the past two months, rises were seen, but they were small – 0.3% and 0.1%. Note that this release lags the German and French releases which were published earlier. An unchanged figure is expected now.
  4. Final Services PMI: Published on Wednesday at 9:00 GMT. Completing Monday’s manufacturing sector, the services sector has been expanding for already 4 months. Last month saw a drop from 53.6 to 52.3 points, but still in the positive zone. It’s predicted to be confirmed this time.
  5. Retail Sales: Published on Wednesday at 10:00 GMT. Although France and Germany already publish their numbers earlier, this important consumer indicator still has a tendency to disappoint and hurt the Euro. Retail sales dropped by 1.2% last month. This time, a rise of 0.4% is expected.
  6. German Factory Orders: Published on Thursday at 11:00 GMT, just before the rate decision. The continent’s industrial giant still pulls the Euro zone forward. Last month saw a (revised) rise of 2.8% in factory orders. The initial number disappointed at first, especially after a negative month, but Germany is still doing well. A small rise of 0.2% is predicted this time.
  7. Rate decision: Published on Thursday at 12:45 GMT. Jean-Claude Trichet probably has no choice but to leave the rates unchanged. Unemployment in Euroland reached 10%, and the recovery, especially in the far flanks of the continent looks very fragile. Inflation has picked up, but an annual rate of 1% is still no threat. The 1% Minimum Bid Rate will stay. 45 minutes after the publication, he will speak at the ECB Press Conference. The tone of his words, hopeful or weary, will set the tone for the Euro’s trading.
  8. German Industrial Production: Published on Friday at 11:00 GMT. Completing the factory orders figure from the previous day, Germany’s industrial output is expected to follow last month’s 0.7% rise with a similar number – 0.5%. This follows volatile months of rises and drops.

EUR/USD Technical Analysis

The Euro had a good start to the week, rising to 1.4196 to test the 1.42 resistance line. It then began losing ground. It made a first dip below 1.40 and rose back up in a sharp false break. Then, it fell again, especially on Friday and went below 1.39.

EUR/USD has dropped to a lower range. This range is bound by 1.40, the previous support line, and 1.3750, which is already a huge support line.

This was a clear line of support and resistance in the past, during the beginning of 2009, and EUR/USD will have a hard time falling below it. If this does happen, 1.3420 is the next support line -it worked as such way back in June.

Looking up above 1.40, the next line of resistance is 1.42, the previous border of the range. Even higher, 1.4450 worked as a resistance line many times in the past. There are many lines above that. lines that were mentioned in last week’s outlook, but they are too far now to mention.

I remain bearish on the Euro.

With a fifth of the young population unemployed, and ongoing Greek trouble, the Euro is weak. It’s currently approaching a strong support line, so further drops seem limited at 1.3750 for the upcoming week.

This pair receives lots of great technical analysis on the web. Here are a few:

  • Casey Stubbs asks when this bleeding will stop, and provides possible answers.
  • James Chen reviews the key breakdown.
  • The Geek Knows reviews the past week and looks forward using his Koala system.

I’ll add more as they emerge.

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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