EUR/USD Forecast Dec. 7-11 – ECB policy meeting in focus

The US manufacturing sector continued to grow, as the ISM Manufacturing PMI came in at 57.9, although this was weaker than the previous release of 59.3 points. The ISM Services PMI fell to 55.9, down from 56.6 points. Still, this was a sixth straight month of expansion. In testimony on Capitol Hill, Federal Reserve Chair Powell reiterated his message for further fiscal stimulus support from the federal government. Nonfarm payrolls dropped to 245 thousand, down sharply from 638 thousand. This missed the estimate of 480 thousand. Wage growth surprised with a gain of 0.3%, above the estimate of 0.1%.

1. German Industrial Production: Monday, 7:00. Industrial Production rebounded in September with a gain of 1.6%. The estimate for October stands at 1.8%.
2. Sentix Investor Confidence: Monday, 9:30. Investor confidence remains mired in negative territory, which points to prolonged pessimism. Another weak reading is projected for December, with a forecast of -11.9 points.
3. German ZEW Economic Sentiment: Tuesday, 10:00. The indicator has been falling fast and fell to 39.0 in November, which points to deep contraction. The December estimate stands at 45.2 points.
4. ECB Rate Decision: Thursday, 10:45. The ECB holds its policy meeting later this week. The central bank is projected to add further easing, with analysts expecting an increase in the Pandemic Emergency Purchase Program by 400-600 billion euros.
5. French Final CPI: Friday, 7:45. The eurozone’s second-largest economy has not been able to generate any inflation, and CPI came in at 0.0% in October. We now await the November data.

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EUR/USD enjoyed a strong week, as the pair punched across the 1.21 line. There are five events in the upcoming week. Here is an outlook at the highlights and an updated technical analysis for EUR/USD.   German CPI declined 0.8%, as deflation remains a major worry.   German and Eurozone Manufacturing PMIs remained in expansionary territory, with readings of 57.8 and 53.8, respectively. The services sector continues to point to contraction, with readings below 50 in Germany and across the eurozone. Eurozone retail sales showed a respectable gain of 1.5%, while German factory orders climbed 2.9%. The US manufacturing sector…