Browsing: EUR/USD Forecast

It finally happened – EUR/USD broke out of range and closed the week significantly higher. This week’s German ZEW Economic Sentiment and 6 other figures will impact the Euro. Here’s an outlook for this week’s key events in Europe, and an updated technical analysis for EUR/USD.

EUR/USD forex graph.

EUR/USD Breakout

Last week, the Euro moved mostly on the dollar’s weakness, in two waves, rather than on good data, such as the German Factory Orders. Let’s see what’s up this week:

  1. Industrial Production:  The industrial production for the whole continent is published after France and Germany, but can still bring serious surprises. Last month’s figure disappointed by falling 0.6%, when a rise of 0.3% was expected. This month pessimism is back, and the number is expected to fall again, by 0.3%. Published on Monday at 9:00 GMT.
  2. French CPI: France releases the CPI after Germany, so only a big surprise can have an impact. After Germany posted a surprising rise in prices, France is also expected to do so, and show a rise of 0.4% in prices. Published on Tuesday at 6:45 GMT.
  3. German ZEW Economic Sentiment: 500 German industrial investors are surveyed in this very important survey. This survey showed great optimism last month and rose to 56.1 points, much higher than expected. It’s now expected to continue up to 59.8 points, and push EUR/USD higher. Published on Tuesday at 9:00 GMT. At the same time, the all-European ZEW Economic Sentiment is also released. It’s expected to rise from 54.9 to 57.8 points. Since the ZEW is a German institute and Germany leads Europe in the recovery, the German number is more important.
  4. CPI: Consumer Price Index for the all of Europe is still expected to show deflation. Prices are expected to fall by 0.2% (annually adjusted). Also the Core CPI figure is predicted to be low, declining from 1.3% to 1.2%. Prices weigh on the Euro, since the interest rate isn’t expected to rise in the near future. Published on Wednesday at 9:00 GMT.
  5. Trade Balance: European Trade Balance is published after the main economies do that, but still has an impact. The surplus is expected to grow from 1 billion to 1.2 billion. France and Germany lean on exports. Published on Thursday at 9:00 GMT.
  6. German PPI: Inflation figures continue to draw attention. German Producer Price Index fell badly last time – by 1.5% last month. This time it’s expected to get back to normal levels of change, and rise by 0.1%, similar to the changes in previous months.
  7. Current Account: This figure is important mostly for seeing the cash flow into the continent. The deficit in the current account was triple the expectations last month, standing on 5.3 billion. This time it’s expected to squeeze back to 4.3 billion. Published on Friday at 8:00 GMT.

EUR/USD will naturally move by American figures as well with CPI and Retail Sales being the most important ones.

EUR/USD Technical Analysis

After I’ve complained again about the range trading in last week’s EUR/USD Outlook, the big breakout on Tuesday sent the EUR/USD to new highs. Although the break was small at the beginning, a second wave sent the EUR/USD to a peak of 1.4634, almost 200 pips above the resistance line. It finally closed at 1.4569, still convincing.

I’ve left the uptrend channels in the chart, although they’ve also been broken. Looking at horizontal lines, 1.4444 now serves as support. After EUR/USD closed above this line, it shouldn’t test it soon.

Looking up, 1.4720 is the next resistance line. It was the swing peak in mid-December. The next major resistance line is 1.4908. It served as a peak in August 2008, as well as several times at the beginning of 2008.

Will the EUR/USD adopt a trading range of 1.4444-1.4720? Or will it continue to move?

Check out Casey Stubbs’s insightful technical analysis for EUR/USD.

Further reading:

Get the 5 most predictable currency pairs

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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