EUR/USD Forecast March 16-20 – Euro Slips as Coronavirus Paralyzes Eurozone

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It was a roller-coaster week for EUR/USD last week. The pair climbed close to the 1.15 level at the start of the week, only to reverse directions and fall below the 1.11 line. It’s a light schedule on the fundamental front, with four events in the upcoming week. Here is an outlook at the highlights and an updated technical analysis for EUR/USD. 
The ECB did not follow the lead of the Federal Reserve and maintained interest rates at a flat 0.00%. The bank unveiled a financial relief package. This included cheap loans to banks, in order to increase credit to small and medium-sized businesses.
There were some strong numbers out of Germany last week. Industrial production jumped 3.0% in December, after a decline of 3.5% in the previous release. The December gain easily beat the estimate of 1.7%. Final CPI rebounded with a gain of 0.4% in February, after a 0.6% decline a month earlier.
The coronavirus outbreak has led to a full-blown national emergency in the U.S. President Trump banned flights from Europe, which sapped risk appetite and sent investors scurrying to the U.S. dollar. Inflation levels remained low in February, with CPI coming in at 0.1% and Core CPI at 0.2%. Consumer confidence dropped sharply in February, falling from 100.9 to 95.9 points.

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

  1. German ZEW Economic Sentiment: Tuesday: 10:00. This key indicator slowed to 8.7 points in February, down sharply from 26.7 points a month earlier. Analysts are braced for a plunge in investor confidence, as much of the eurozone economy has ground to a halt due to the coronavirus. The forecast for March stands at -25.0 points. 
  2. Eurozone Final CPI: Wednesday, 10:00. Final CPI and Core CPI are both expected in at 1.2%, which would confirm the initial releases from earlier this month.
  3. German PPI: Friday, 7:00. This inflation indicator improved to 0.8% in January, up from 0.1% a month earlier. This marked the strongest gain since 2011. However, the indicator is projected to decline by 0.2% in January. 
  4. Eurozone Current Account: Friday, 9:00. The current account surplus narrowed to EUR 32.6 billion in December, down from 33.9 billion a month earlier. This was well off the estimate of 34.5 billion. The downtrend is expected to continue in January, with an estimate of 30.3 billion. 

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EUR/USD Technical analysis

Technical lines from top to bottom:

With the euro posting strong losses last week, we start at lower levels:

1.1435 was tested by EUR/USD early last week.

1.1290 is next.

1.1215 has also switched to resistance.

1.1119 is an immediate resistance line. It could see more action early in the week.

1.1025 (mentioned last week) came under strong pressure last week. 

1.0925 is next.

1.0829 has held in support since April 2017.

1.0690 is the final support level for now.

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I remain bearish on EUR/USD

The coronavirus continues to take a heavy toll on the eurozone. With Italy under total lockdown and other eurozone countries curtailing movement and shutting down much of the economy, the euro will likely remain under strong pressure.

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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.