EUR/USD posted slight losses last week. There are only three events in the upcoming week. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
There were no surprises from PMI reports, as manufacturing remained weak, while services continued to show expansion. German manufacturing PMI dropped to 44.5 in March, shy of the estimate of 45.2 points. The all-eurozone manufacturing PMI posted a decline of 47.8, missing the forecast of 48.1 points. The services sector, which is more reflective of domestic demand, is in better shape. German services PMI improved to 55.6, while the eurozone indicator showed slight expansion, with a reading of 52.5 points.
There was positive news from the ZEW economic sentiment survey, a key gauge of investor confidence. The indicator has been mired in negative territory for the past 12 months, and finally climbed into positive territory in April. The score of 3.1 points to slight optimism on the part of institutional investors and analysts. The eurozone indicator showed a similar trend, climbing to 4.5 points, its first gain since May.
U.S. numbers enjoyed a solid week. Consumer spending rebounded in March, after posting declines in February. Retail sales jumped 1.6%, above the estimate of 0.9%. Core retail sales gained 1.2%, beating the forecast of 0.7%. As well, unemployment claims sparkled with a reading of 199 thousand. This was only the second reading below the 200-K level in 2019.
EUR/USD daily chart with support and resistance lines on it. Click to enlarge:
- Consumer Confidence: Tuesday, 14:00. With the eurozone economy gripped in a slowdown, it’s no surprise that consumer confidence remains mired in negative territory. The indicator has posted twos straight readings of -7, and no change is expected in the April release.
- German Ifo Business Climate: Wednesday, 8:00. This key indicator improved to 99.6 in March, above expectations. The upward trend is projected to continue in April, with an estimate of 99.9 points.
- Spanish Unemployment Rate: Thursday, 7:00. The fourth-largest economy in the eurozone has seen the unemployment rate drop. The rate edged down to 14.5% in Q3, its lowest level since Q3 of 2008. No change is expected in the Q1 release.
- * All times are GMT
Technical lines from top to bottom:
1.1620 has held in resistance since the start of October.
1.1570 is next.
1.1515 was a high point at the end of January. 1.1435 was a low point at the beginning of February.
1.1390 was a stepping stone on the way up in late January and capped EUR/USD earlier. This is followed by 1.1345.
1.1290 (mentioned last week) remained relevant during the week.
1.1270 was a double-bottom in December 2018
1.1215 is next. This is followed by 1.1119.
1.1025 was a cap back in May 2017.
1.0950 is the final support level for now.
I am bearish on EUR/USD
The U.S economy remains much stronger than that of the eurozone, which continues to be gripped by a slowdown. EUR/USD declined two percent in Q1, and with the ECB content at maintaining rates at a flat 0.00%, investors aren’t likely to snap up euros anytime soon.
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Further reading:
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- GBP/USD forecast – Pound/dollar predictions
- USD/JPY forecast – analysis for dollar/yen
- AUD/USD forecast – the outlook for the Aussie dollar.
- USD/CAD forecast – Canadian dollar predictions
- Forex weekly forecast – Outlook for the major events of the week.
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