EUR/USD Forecast September 16-20 – Euro Yawns as ECB Tweaks Policy

EUR/USD posted slight gains for a second successive week. There are only four events this week and investors will be focused on German ZEW Economic Sentiment. Here is an outlook at the highlights and an updated technical analysis for EUR/USD.
The ECB held a policy meeting, and the highlight could well have been that it was the last meeting chaired by Mario Draghi. Christine Lagarde, head of the IMF, will take over from Draghi. At the meeting, policymakers tweaked the deposit rate, lowering it from 0.50% to 0.40%. German Final CPI was dismal, contracting by 0.2% in August. This marked the first decline since January.
Over in the U.S., consumer inflation reports were a mixed bag. CPI slipped to 0.3%, down from 0.1%, but this matched the estimate. Core CPI remained steady at 0.3%, edging above the forecast of 0.2%. The week wrapped up with retail sales, which slowed considerably in August. Retail sales fell to 0.4%, down from 0.7% a month earlier. Core retail sales slowed to zero, compared to 1.0% in the previous release. It was the first time that core retail sales failed to record gains since March. The UoM Consumer Sentiment ticked lower to 92.0, easily beating the forecast of 90.4.

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

  1. German ZEW Economic Sentiment: Tuesday, 9:00. This confidence indicator should be treated as a market-mover. Confidence on the part of major investors and analysts has been sinking, with the indicator falling to -44.1 in August. The estimate for September stands at -38.0.
  2. Eurozone Inflation Data: Wednesday, 9:00. The eurozone released initial inflation readings in late August, with CPI coming in at 1.0% and Core CPI rising 0.9%. No change is expected in the final readings, which will be released this week.
  3. Current Account: Thursday, 8:00. The eurozone current account surplus was unusually weak in July, narrowing to EUR 18.4 billion, down from 29.7 billion a month earlier. This was the lowest surplus recorded so far this year.
  4. Consumer Confidence: Friday, 14:00. Consumer confidence remains low. The indicator has posted four straight readings of -7, and an identical reading is expected in September.

EUR/USD Technical analysis

Technical lines from top to bottom:

1.1390 was a stepping stone on the way up in late January and capped EUR/USD earlier.

1.1345 is next. 1.1290 has held in resistance since the first week of July.

Close by, 1.1270 was a double-bottom in December 2018.

1.1215 is the next resistance line.

1.1119 (mentioned last week) is next.

1.1025 remained relevant last week and ended the week in a support role.

1.0950 is next.

1.0829 has held in support since April 2017.

1.0690 is the final support level for now.

I remain bearish on EUR/USD

The eurozone continues to struggle, as weak global conditions and the U.S-China trade war have taken a heavy toll on the manufacturing sector. Meanwhile, the Brexit crisis is only getting deeper, as a withdrawal deal with London remains elusive. with just five weeks until the U.K. is scheduled to set sail from the EU.

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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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