Search ForexCrunch

EUR/USD  was hit hard in the first week of March diving deep below 1.10.  The  strong US data and a determined Draghi took a heavy toll. What’s next?  Here is an outlook for  the highlights of this week and an updated technical analysis for EUR/USD.

Draghi revealed details about QE, which starts on March 9th. And while the ECB raised some forecasts, the president made clear that these depend on QE implementation. He also left the door open to extending the program beyond September 2016.  Euro-zone data  came out generally better than expected: inflation fell by only 0.3%, German retail sales beat and Spanish employment is improving. In the US, data was upbeat as well:  the US gained 295K jobs in February, beating expectations. A disappointment came from wages, which are stuck once again. Nevertheless, the dollar just continued advancing against the euro, breaching some interesting historical lines. What’s next?

[do action=”autoupdate” tag=”EURUSDUpdate”/]

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

EURUSD Technical analysis March 9 13 2015 euro dollar fundamental outlook sentiment trading

  1. Eurogroup and ECOFIN meetings: Monday and Tuesday respectively.  News from Greece went to the back burner after a 4 month extension was agreed upon. However,  the nature of a short extension is that  the topic of the debt stricken country never goes too far. A repayment to the IMF is one of the topics on the agenda, as well as the implementation of reforms Greece presented.
  2. German Trade Balance: Monday, 8:00. The German export machine creates a big trade surplus that has recently advanced to 21.8 billion euros. Another advance is on the cards now: 22.3 billion.
  3. Sentix Investor Confidence: Monday, 9:30. This 2800 strong survey has beat expectations and entered positive ground back in January. Another rise is expected from the 12.4 points recorded in February: 15.3 points in March according to predictions. A positive number reflects optimism.
  4. French Industrial Production:  Europe’s second largest economy enjoyed a bounce in industrial output during the month of December: 1.5%.  Expectations remain upbeat for French  industry: a rise of 0.8% is likely.
  5. French Final Non-Farm Payrolls: Wednesday, 6:30.  The French job market has seen some signs of recovery if we look at jobless claims, but Q3 saw no change in the overall NFP.  For the fourth quarter, no change in overall jobs is expected once again.
  6. German Final CPI: Thursday, 7:00. Germany reported  milder than expected falls in prices in the initial report for February, and this resulted in milder deflation for the whole euro-zone. The numbers will likely be confirmed now.
  7. French CPI: Thursday, 7:45. France has seen a big fall in prices in January: a full 1% m/m. The figure for February is expected to show a  bounce back up of 0.6%, in line with data seen in other countries. The number feeds into the final EZ report for this month due in the following week.
  8. Industrial Production: Thursday, 10:00. Output in the zone’s third  largest economy remained flat in December. A rise is on the cards now: +0.3%. Germany enjoyed a gain of 0.6%.
  9. German WPI: Friday, 7:00.  The Wholesale price index is another measure of inflation. After a fall of 0.4% in  January, a more moderate slide of 0.2% is now estimated.

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar began the week with a slide and found some support at 1.1113 (mentioned last week). The pair then dropped and made an attempt to recover, but hit that same line. A further depreciation followed, with the pair losing 1.10 and reached down to deeper lows.

Live chart of EUR/USD: [do action=”tradingviews” pair=”EURUSD” interval=”60″/]

Technical lines from top to bottom:

We start from lower ground this time. The  post Swiss bounce of 1.1650 which worked as resistance. Lower,  1.1540 provided support in mid January.

Below the round number of 1.15 we have  the pre-QE low of  1.1460  that could work as resistance.

1.1373 was the low line seen in November 2003 and proved to work as resistance and support lately. Below the initial low point of 1.1313 we  have 1.1270, which  provided support twice in February 2015.

The round number of 1.12 is now the pivotal line in the range. It is followed by the fresh low of 1.1113 which is nearly 0.90 on USD/EUR.

The next line is the round  1.10. A minor is dates back to October 1999: 1.0910. It was resistance back then. This is followed by 1.0860, which is where the pair paused in March 2015.

It is followed by 1.0760, which was the low point in both July and August 2003.  Below this point we have the round numbers of 1.05 and 1 – EUR/USD parity, which is already eyed by some analysts.

I turn from bearish to neutral  on  EUR/USD

Everything plays against the euro: QE is commencing as planned and with full determination. The central bank refuses to being impressed by better data.  We have already seen the impact of the expectations and the announcement, and now we could see more with implementation. In the US, the ongoing strong jobs growth is positive and basically cements a removal of forward guidance in the March 18th Fed meeting, that will likely be followed by a hike in June.

Having said all that, we have seen a phenomenon of EUR/USD bounces following the NFP, and this could happen again. The poor wage growth could be the excuse and so could the massive fall. the pair could be seen as oversold. So in general, the trend remains down but in the short term we could see a pause.

In the fresh podcast, we talk about the US economy,  the Australian and Canadian rate decisions, a potential easing in Japan, the widening gap within oil prices and an update on forex brokers after the SNBomb

Follow us on the    iTunes page

If you are interested a different way of trading currencies, check out the  weekly binary options setups, including EUR/USD and more.

Further reading: