EUR/USD Forecast Aug. 24-28 – Euro retreats after push towards 1.20

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EUR/USD pushed close to the 1.20 level but was unable to consolidate and showed little movement over the week. There are seven events in the upcoming week, including PMIs. Here is an outlook at the highlights and an updated technical analysis for EUR/USD. 
The Eurozone current account surplus soared to EUR 20.7 billion, up from EUR 8.0 billion. Eurozone CPI was revised to 0.4%, up a notch from 0.3%. The core reading came in at 1.2%, confirming the initial read. German Manufacturing PMI improved from 52.2 to 53.3, while the eurozone index slowed from 52.7 to 51.7. In the services sector, German Services PMI dropped to 50.8, down sharply from 55.3. The eurozone PMI slipped to 50.1, down from 54.6.
In the US, the Philly Fed Manufacturing index slowed to 17.2, down from 24.1 beforehand Unemployment claims surprised by climbing to 1.1 million, above the estimate of 930 thousand. The Federal Reserve minutes were dovish. Members stated concern about the continuing adverse impact of Corvid-19 on the US economy. The minutes also reiterated a call from Fed Chair Jerome Powell on the need for a fiscal package from Congress to boost the struggling economy. The week ended with good news from the manufacturing sector, as Manufacturing PMI improved to 53.6, its highest level since February 2019.

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

  1. German GDP: Tuesday, 6:00. The German economy plunged 10.1 in the second quarter, reflective of the enormous damage caused by Covid-19. The final reading is expected to confirm the initial read.
  2. German Ifo Business Climate: Tuesday, 8:00. Business confidence has been moving higher and climbed from 86.2 to 90.5 in July. The upswing is expected to continue in August, with an estimate of 92.5.
  3. Monetary Data: Thursday, 8:00. M3 Money Supply accelerated for a sixth straight month, climbing to an annual growth rate of 9.2.% in June. This was up from 8.9% a month earlier. Private Loans remained pegged at 3.0% in June y/y. We will now receive data for July. Money Supply is projected to rise to 9.5% while Private Loans are expected to grow again by 3.0 percent.
  4. German GfK Consumer Climate: Friday, 6:00. Consumer confidence improved to -0.3, up from -9.6 beforehand. Will the indicator punch into positive territory in the upcoming release?
  5. French GDP: Friday, 6:45. The previous release of Q2 growth data was dismal, with a reading of -13.2%. This release will likely confirm the initial figure.
  6. French Consumer Spending: Friday, 6:45. Consumers in the second-largest economy in the euro-zone have increased their spending for two successive months. In June, the indicator gained 9.0%. We now await the July data.
  7. French CPI: Friday, 7:45. France saw an increase of 0.4% in prices in July, the first gain in three months. It is the last major country to report inflation figures before the all-European number is due. Will we see another gain in the upcoming release?
  • All times are GMT

EUR/USD Technical analysis

Technical lines from top to bottom:

We start with resistance at 1.2174.

This is followed by 1.2053.

1.1958 is protecting the symbolic 1.20 level.

1.1844 remains relevant.

1.1723 is the first support line.

1.1652 has held in support since late July.

1.1573 (mentioned last week) is next.

1.1470 has held since mid-March. It is the final support line for now.

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I am bullish on EUR/USD

The US dollar has struggled and the euro has taken advantage – last week was EUR/USD’s first losing week since June. Unless the US economy shows significant improvement, the euro could rebound against the dollar this week.

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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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