EUR/USD Forecast March 30-April 3 – Euro Soars on Broad Dollar Weakness

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EUR/USD had an excellent week, climbing 4.6 percent and breaking above the 1.14 level. There are eight events in the upcoming week. Here is an outlook at the highlights and an updated technical analysis for EUR/USD. 
Eurozone Services PMIs were dismal in March, as initial releases pointed to sharp contraction. Germany came in at 34.5, France slowed to 29.0 and the all-eurozone PMI came in at 28.4 points. All three were well below expectations. The manufacturing PMIs were stronger, but all came in below the 50-level, which separates expansion from contraction.
The U.S. dollar was broadly lower last week, following a staggering figure for unemployment claims, which hit 3.2 million. This was due to the shutdown of many factories and businesses across the country. The ISM Manufacturing PMI dipped to 49.2 in March, down from 50.8 a month earlier. It marked the first contraction since August. Elsewhere, durable goods orders in February were a mix. The headline figure jumped 1.2%, up from -0.2% a month earlier. However, the core reading declined by 0.6%, compared to a gain of 0.9% in February. GDP for Q4 showed a 2.1% in the third estimate, confirming the previous estimate.

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

  1. German Preliminary CPI: All Day. German inflation came in at 0.4% in February, matching the forecast. The estimate for the initial March reading stands at 0.0%.
  2. Spanish Flash CPI: Monday, 8:00. Consumer inflation in the eurozone’s fourth-largest economy slowed to 0.8% in February, down from 1.1% a month earlier. The downtrend is expected to continue in March with a forecast of 0.6%.
  3. French Consumer Spending: Tuesday, 6:45. Consumer spending fell sharply in January, with a decline of 1.1%, compared to -0.3% in December. Another weak reading is expected, with an estimate of -0.7%.
  4. Eurozone Inflation: Tuesday, 9:00. The final reading for January CPI came in 1.2%, confirming the initial estimate. The initial estimate for March stands at 0.8%.
  5. German Retail Sales: Wednesday, 7:00. Retail sales rebounded in January with a gain of 0.9%, after falling 3.3% in December. A small gain of 0.2% is projected for February.
  6. Manufacturing PMIs: Wednesday: 7:15 for Spain, 7:45 for Italy, final French figure at 7:50, final German one at 7:55, and final euro-zone number at 8:00. In the initial readings, France fell to 42.9, Germany slipped to 45.7 and the all-eurozone PMI slowed to 42.9 points. However, all three PMIs beat their estimates. The final readings are expected to confirm the initial releases.
  7. Services PMIs: Friday, 7:15 for Spain, 7:45 for Italy, final French figure at 7:50, final German one at 7:55, and final euro-zone number at 8:00. The services PMIs plunged in March – Germany fell to 34.5, France slowed to 29.0, while the all-eurozone PMI slipped to 28.4 points. All three readings point to sharp contraction and were well below expectations. The final readings are expected to conform to the initial releases.
  8. Eurozone Retail Sales: Friday, 9:00. Retail sales rebounded in January with a gain of 0.6%, after a decline of 1.6% in December. Analysts are braced for a weak gain of 0.1% in the upcoming release.

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EUR/USD Technical analysis

Technical lines from top to bottom:

With EUR/USD posting sharp gains last week, we start at higher levels:

1.1435 was tested in resistance in mid-March.

1.1290 (mentioned last week) is next. is protecting the round number of 1.1300.

1.1215 is next.

1.1119 is an immediate support level.

1.1025 has some breathing room in support.

1.0900 follows.

1.0825 is the final support level for now.

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I remain bearish on EUR/USD

The dollar continues to be a magnet for investors during the current crisis. Although the dollar did have an off-week due to a dismal jobless claims report, the outlook for the dollar remains positive.

Further reading:

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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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