EUR/USD Forecast Dec. 23-27 – German, Eurozone Manufacturing Remain Soft

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EUR/USD posted slight losses last week, erasing most of the gains seen a week earlier. The upcoming week has one event, German Import Prices. Here is an outlook at the highlights and an updated technical analysis for EUR/USD.
German manufacturing activity softened in November, dropping from 43.8 to 43.4 pts. This missed the estimate of 44.6 and underscores ongoing contraction. The same trend was seen in the eurozone manufacturing PMI, which fell to 45.9 pts. The services industry continues to outperform manufacturing, with Germany and eurozone releases pointing to expansion.
The U.S. posted solid numbers last week, underscoring positive economic conditions. Manufacturing PMI improved to 52.5 in December, just shy of the estimate of 52.6 pts. This was the indicator’s strongest gain since March and points to modest expansion. The week ended with Final GDP, which was unrevised at 2.1 percent.

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

  1. German Import Prices: Monday, 7:00. Import prices continue to drop, as the indicator has posted declines in five of the past six months. This points to weaker inflation. The October release came in at -0.1%, edging above the forecast of -0.2%.

EUR/USD Technical analysis

Technical lines from top to bottom:

We start with resistance at 1.1515, which was a high point at the end of January.

1.1435 was a low point at the beginning of February.

1.1390 has held firm in resistance since June. This is followed by 1.1345.

1.1290 was last tested in early July. 1.1215 is next.

1.1119 remains relevant. It is an immediate resistance line.

1.1025 (mentioned last week) is protecting the symbolic 1.10 level. 1.0925 is next.

1.0829 has held in support since April 2017.

1.0690 is the final support level for now.

I am neutral on EUR/USD

Economic activity in the eurozone remains soft, and the German locomotive is also showing signs of weakness. The trade agreement between the U.S. and China could, however, boost exports from the eurozone and lift the manufacturing sector.

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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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