EUR/USD Outlook – November 9-13 2009

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Looking for the latest outlook, for the current week? Check out the section: EUR/USD Forecast.

After a good week, the Euro expects a week full with indicators, with GDP numbers kept for Friday. The Euro is slowly climbing again, but it still seems out of fuel. Here’s an outlook for the events in the Euroland and an updated technical analysis for EUR/USD.

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

EUR/USD Forecast

Germany and France are already out of recession, but the continent as a whole still isn’t there. Will the Euro zone get out of recession in Q3? These releases are on Friday, and there’s lots more before that. Let’s review the events:

  1. German Trade Balance: Europe’s largest economy enjoys a surplus in its trade balance. This surplus is on the rise, but fell last month down to 10.6 billion. It’s expected to return back up to 12 billion, showing the steady growth of the German economy. Published on Monday at 7:00 GMT.
  2. Sentix Investor Confidence: 2800 experts are surveyed about their current sentiment towards the European economies. This index is negative, meaning a pessimistic sentiment for almost a year and a half. In recent months it has improved, reaching -12.6 points. It’s predicted to edge up to -10.8 points. Published on Monday at 9:30 GMT.
  3. German Industrial Production: Returning to Germany, it’s industrial production is published earlier than other countries. This indicator went up and down in recent months, posting a neat 1.7% rise last time. This month, the rise is expected to continue – by 1.4%. Published on Monday at 11:00 GMT.
  4. German Final CPI: Deflation is a serious problem in Europe. Germany’s Consumer Price Index is around zero in recent months, falling by 0.4% last month and rising by 0.1% this time, according to the preliminary release. This 0.1% rise is expected to be confirmed on Tuesday at 7:00 GMT.
  5. French Industrial Production: Europe’s second largest economy has an industrial production that is more stable. It posted growth in the past 4 months, with a surprising 1.8% last time. Half of this growth is expected this time – 0.9%. Published on Tuesday at 7:45.
  6. German ZEW Economic Sentiment: This release is very important for the Euro. 350 senior investors and analysts are surveyed for their sentiment. This indicator fell to 56 points last time, taking it two months backwards. The disappointment hurt the Euro. Expectations have been modified, and another fall is predicted this time – to 55 points. EUR/USD will shake during the release, on Tuesday at 10:00 GMT. Note that the same indicator will be published for the whole continent, but it’s less accurate. The all-European figure is predicted to rise from 56.9 to 58.9 points.
  7. Axel Weber talks: The president of Germany’s central bank, Axel Weber, is an influential member of Jean-Claude Trichet’s ECB. His words might indicate future policy. He’ll make two public appearances this week: on Wednesday at 17:00 GMT, and on Friday (following the GDP numbers) at 13:15 GMT. His speech on Friday is more important.
  8. ECB Monthly Bulletin: This report gives us an insight to the numbers that the ECB members were checking out before making their recent decision, which wasn’t very exciting. Published on Thursday at 9:00 GMT.
  9. Industrial Production: At the time of the all-European release, industrial production numbers have already been published in Germany and France. As we see in the GDP, there’s a significant difference between the large and strong economies to all the rest. The all-European figure is predicted to rise by 0.6%, following a nice 0.9% last time.
  10. Jean-Claude Trichet talks: The president of the ECB, JEan-Claude Trichet will speak on Thursday at 19:00 GMT. In speech addressing the future beyond the lost year of 2009, he might hint about the timing of a rate hike, something that probably won’t happen in the near future.
  11. German Prelim GDP: The main course of the week is served on Friday at 7:00 GMT. After a year of recession, Germany got out of it in the second quarter of 2009 – posting growth of 0.3%. The resilient German economy is predicted to show a faster pace of growth in Q3 – 0.8%, according to the initial release. EUR/USD will shake.
  12. French Prelim GDP: Europe’s second largest economy is also out of recession, posting the same growth rate as Germany. Here, third quarter growth is expected to be less than Germany – 0.6%. Published on Friday at 7:50 GMT.
  13. Flash GDP: As aforementioned, the whole Euro-zone hasn’t see the end of recession. The Euro-zone’s economy squeezed by 0.2% in Q2. Optimism rules here as well, and a growth rate of 0.6% is predicted. This preliminary release is due on Friday at 10:00 GMT.

EUR/USD Technical Analysis

The Euro had a bad start to the week, failing to enjoy good figures and break the resistance line. It then fell below previous levels, bottoming at 1.4626. It made a strong comeback, rising as high as 1.4917, before closing at 1.4846.

The resistance line of 1.4842, that was mentioned in last week’s EUR/USD outlook was eaten from all directions, and doesn’t appear in the graph.

Looking up, I marked 1.4917 as the immediate minor resistance line. It was this week’s peak, and also back in August last year.

Higher above, this year’s high of 1.5060 is the next resistance line. Even higher, 1.5144 was a support line when the Euro was going up and now serves as a resistance line.

Looking down, I’m keeping 1.4683 and taking the dip as temporary. It’s a minor support line. Further below, 1.4444 was a huge resistance line in recent months, and continues to be a major support line.

For more technical insight, I suggest reading Casey Stubbs’ most recent EUR/USD analysis. Another great read is Mohammed Isah’s EUR/USD strategic analysis. Also check out a The Geek Who Knows, with an interesting EUR/USD technical analysis of his own.

I remain neutral on EUR/USD. The fear of an ongoing crisis in the world, as seen in the bad employment numbers from the US, make the steady European recovery not enough to push the currency much higher.

Further reading:

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.