EUR/USD Forecast April 20-24 – Investors Brace for Weak PMIs and Confidence Indicators

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EUR/USD recorded slight losses last week. The upcoming week features confidence indicators and PMIs. Here is an outlook at the highlights and an updated technical analysis for EUR/USD. 
Eurozone industrial production declined by 0.1% in February, after a strong gain of 2.3% a month earlier. On the inflation front, Eurozone CPI came in at 0.7%, while the core reading showed a gain of 1.0 percent. This confirmed the initial readings.
In the U.S., consumer spending was down sharply in March. Retail sales declined by a staggering 8.7%, worse than the estimate of an 8.0% decline. The core reading fell by 4.5%, beating the forecast of 4.9 percent. The employment market remains in disarray, as employment claims topped the 5-million mark. On the manufacturing front, the Philly Manufacturing Index plunged to -56.6, compared to -12.7 a month earlier. This was weaker than the estimate of -30.0 points.

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

  1. Eurozone Trade Balance: Monday, 9:00. The eurozone’s trade surplus narrowed to EUR 17.3 billion in January, down from EUR 22.2 billion a month earlier. This missed the estimate of EUR 19.3 billion. The surplus is projected to improve to EUR 19.2 billion in February.
  2. German ZEW Economic Sentiment: Tuesday, 9:00. Institutional investors were deeply pessimistic in March, as the indicator plunged to -49.5 points, down from +8.7 points in February. Another weak reading is expected, with an estimate of -40 points. The all-eurozone indicator slipped to -49.5 in March and the April forecast stands at -38.2 points.
  3. Eurozone Consumer Confidence: Wednesday, 14:00. The eurozone consumer remains pessimistic about economic conditions. The indicator slipped to -12 in March, down from -7 a month earlier. The downturn is expected to continue in April, with an estimate of -20 points.
  4. German GfK Consumer Climate: Thursday, 6:00. German consumer confidence slowed to 2.7 points in February, down from 9.8 in January. This was well short of the estimate of 7.4 points. The March estimate stands at -2 points.
  5. PMIs: Thursday, 7:15 in France, 7:30 in Germany, and 8:00 for the whole eurozone. Services PMIs continue to indicate deep contraction and weakened in March. In April, the German PMI is projected to come in at 29.0, the eurozone PMI is expected at 24.9 and the French PMI at 25.1 points. Manufacturing PMIs have been stronger, with readings near the 40-level, but this still points to contraction. In April, the eurozone PMI is expected at 39.4, the German PMI at 39.0 and the French index at 37.9 points.   
  6. German Ifo Business Climate: Friday, 8:00. Business confidence dipped to 86.1 in March, down from 87.7 a month earlier. This missed the estimate of 87.9 points. We now await the April release.

EUR/USD Technical analysis

Technical lines from top to bottom:

We start with resistance at 1.1215, which has held since mid-January. 1.1119 is next.

1.1025 (mentioned last week) has some breathing room in resistance.

1.0900 is an immediate resistance level. It could see action early next week.

1.0829 is providing support.

The round number of 1.07 is next.

1.0620 is protecting the 1.06 level. It is the final support level for now.

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I remain bearish on EUR/USD

The eurozone economy has been hard hit by the Corvid-19 virus, especially Italy and Spain. EUR/USD is down 1.4% in April. Economic numbers are expected to worsen in April, as this month’s data will reflect the Covid-19 outbreak, which hit Europe in March. This does not bode well for the euro.

Further reading:

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About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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