EUR/USD Forecast March 8-12 – Euro struggling at 1.19, ECB up next

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EUR/USD fell 1.3% last week, its worst 1-week showing since October 2019. There are six events on the calendar this week, highlighted by the ECB rate decision. Here is an outlook at the highlights and an updated technical analysis for EUR/USD.

Inflation was robust in the eurozone in February, with Germany at 0.7% and the eurozone at 0.9%. Final PMI reports for Germany and the eurozone indicated strong growth in manufacturing but pointed to contraction in the services sector. The German Manufacturing PMI was especially robust, with a reading of 60.7. However, German retail sales declined for a second straight month, with a reading of -4.5% in February. Eurozone retail sales plunged by 5.9%. The week ended on a positive note, as German Factory Orders gained 1.4%.

In the US, ISM PMIs remained in expansion territory in February. Manufacturing PMI rose to 60.8, up from 58.7 beforehand. This marked its highest level since August 2018. Services PMI slowed to 55.3, down from 58.7. The week wrapped up with Nonfarm Employment Change, which shined with a reading of 397 thousand, crushing the estimate of 197 thousand. The unemployment rate edged lower to 6.2%, down from 6.3%.

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

  1. German Industrial Production: Monday, 7:00. Industrial Production slowed to 0.0% in December and the downward trend is expected to continue in January, with a forecast of -1.4%.
  2. Sentix Investor Confidence: Monday, 9:30. The index has managed only one gain in the past 12 months, pointing to prolonged pessimism among financial experts. The street consensus for March stands at 0.3 index points.
  3. Revised GDP: Tuesday, 10:00. The second estimate for growth in Q4 of 2020 stands at -0.6%, which would confirm the initial estimate. The Q3 read came in at 12.5 percent.
  4. ECB Rate Decision: Thursday, 12:45. The ECB holds its annual monthly policy meeting against a backdrop of rising global bond yields. Investors will be keeping a close eye on the rate statement, looking for clues regarding future monetary policy.
  5. German CPI: Friday, 7:00. Inflation showed a respectable gain of 0.8% in February and the second-estimate forecast is expected to come in at 0.7%.
  6. Industrial Production: Friday, 10:00. Industrial Production declined in December by 1.6%. The indicator is expected to rebound with a small gain of 0.2% in January.

EUR/USD Technical analysis

Technical lines from top to bottom:

We start with resistance at 1.2251 (mentioned last week).

1.2170 is an important monthly resistance line.

1.2009 is next.

1.1945 has switched to resistance after sharp losses by EUR/USD last week.

1.1846 is the first line of support.

1.1667 is the final support line for now.

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I am bearish on EUR/USD

The euro continues to underperform. Higher US bond yields have boosted the US dollar, and a strong NFP last week reflects a US economy that is on its way to recovery.

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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