EUR/USD remained range-bound once again trading almost exclusively in a narrow range. Will growing downside pressures have their say? Final inflation data a German survey stand out. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
More signs of euro-zone weakness emerged with industrial output falling by 0.8%. The ECB reiterated that the change in wording seen in the last statement was not significant: a removal of stimulus is not getting closer. This came after ECB member Nowotny said that QE will end this year only to have his comments disowned by the wider Bank. In the US, inflation came out as expected but the higher read is a reason to be cheerful for the Federal Reserve according to the FOMC Meeting Minutes, that expressed confidence about the economy and reaching the 2% inflation target. Worries about Syria turned into an airstrike by the US, the UK, and France over the weekend. The concerns were not really felt in EUR/USD.Updates:
- Apr 20, 16:13: Not too much support after EUR/USD broke down: The Technical Confluences Indicator that the recent fall of the EUR/USD was powerful as it breached a critical cluster of support lines...
- Apr 20, 11:43: Euro-zone weakness is finally expressed in EUR/USD: The EUR/USD is trading lower, yet still within a very tight range. Disappointing euro-zone figures and a Federal Reserve that...
- Apr 20, 8:52: Is inflation rearing its ugly head? Oil is on fire – MM #178: We start by examining the recent signs of rising inflation in the US, continue with one factor that is on...
- Apr 19, 12:24: Will Merkel and Macron move EUR/USD? It has more support but one big resistance line: The EUR/USD is trading in a narrowing range and is looking for a new direction. Further evidence of a slowdown...
- Apr 18, 11:59: More ugly data in Europe but EUR/USD is steady as ever: The EUR/USD is on the back foot once again, but ranges are limited. Disappointing euro-zone data continues piling on while...
- Apr 17, 19:03: EUR/AUD and Crude Oil Elliott Wave Analysis Update: Crude oil can be currently unfolding a corrective retracement, which can see support at the first support target, at 65.90...
- Apr 17, 12:08: EUR/USD cannot really go up – creates a double-top of sorts: The EUR/USD is back to the well-known trading range after a short-lived move to the upside. The disappointing German ZEW...
- Apr 17, 7:38: EUR/GBP: En-Route To 0.84 But 2 Caveats Remain; UK Data Likely GBP Positive This Week – SocGen: The pound has reached the highest levels against the dollar since 2016 and it also makes gains against the euro....
- Apr 16, 16:10: US Retail Sales are only OK – EUR/USD can continue higher: The EUR/USD holds onto its gains after the US released a mixed bag of Retail Sales data Headline sales rose...
EUR/USD daily chart with support and resistance lines on it. Click to enlarge:
- German WPI: Monday, 6:00. The Wholesale Price Index dropped by 0.3% in February, implying weaker consumer inflation in the pipeline. The report for March is expected to show a rise of 0.4% in Europe’s largest economy.
- German ZEW Economic Sentiment: Tuesday, 9:00. The ZEW institute releases its survey early in the month. After a significant fall to 5.1 points in April, an outright negative figure is projected for April: -0.8 points. This would be the lowest since July 2016, right after Brexit. The all-European figure is forecast to slide from 13.4 to 7.3 points.
- Final CPI: Wednesday, 9:00. According to the initial read for the month of March, headline inflation stood at 1.4% while core inflation lagged behind with 1%. These sluggish figures will likely be confirmed and hold back the ECB from withdrawing the monetary stimulus.
- Current Account: Thursday, 8:00. The euro-zone enjoys a current account surplus thanks to German exports. After a whopping level of 37.6 billion in January, a squeeze to 32.3 billion is on the cards.
- German PPI: Friday, 6:00. The Producer Price Index dropped by 0.1% in February, similar to the WPI. And also here, a bounce of 0.2% is on the cards.
- Jens Weidmann talks: Friday, 11:30. The President of the German central bank, the Bundesbank, and the leading candidate to inherit Draghi’s post as President, speaks in Washington and will likely provide his hawkish views about the economy and the need to remove monetary stimulus.
- Consumer Confidence: Friday, 14:00. After many months in deep negative territory, the consumer confidence measure finally reached a balance at 0. A repeat of the very round score is on the cards.
* All times are GMT
EUR/USD Technical Analysis
Euro/dollar traded in a narrow range around 1.2345 (mentioned last week).
Technical lines from top to bottom:
1.2555 is the three-year high the pair reached in mid-February. 1.2477 was the high point in March but did not hold up for long.
1.2445 capped the pair in early March and remains important. 1.2395 capped the pair in mid-April and is the top of the range.
The round number of 1.2300 was a low point around mid-April and is the bottom of the range. Further below, 1.2270 was a swing low in mid-February and mid-March.
The 1.2210 level which served as a cushion in April is the next level to watch. 1.2155 was a low point in early March and the last line before 1.2090, the 2017 high.
I remain bearish on EUR/USD
With growing signs of euro-zone economic weakness and stronger inflation figures for the US, the pair has room on the downside.
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