EUR/USD traded in well-known ranges amid disappointments from both sides of the Atlantic. PMIs and another speech from Draghi stand out this week. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
Business confidence remains subdued according to ZEW. Draghi did not rock the boat, nor did inflation figures, that confirmed the weak data. In the US, data came out worse than expected, with retail sales standing out. While this buried those last hopes for a rate hike, it did not bury the US dollar. All in all, the pair remains very balanced. Is it about to explode?Updates:
EUR/USD daily graph with support and resistance lines on it. Click to enlarge:
- Current Account: Monday, 8:00. Mostly thanks to German exports, the euro-zone enjoys not only a wide trade surplus but also a similar current account surplus. In June, the surplus hit 28.2 billion. A similar figure is now expected: 27.2 billion.
- German PPI: Tuesday, 6:00. Producer prices eventually feed into consumer prices. In Germany, the largest economy in the euro-zone, prices advanced by 0.2% in July. We now get the figures for July. A rise of 0.1% is on the cards now.
- ECB Economic Bulletin: Thursday, 8:00. Two weeks after the European Central Bank’s decision, they publish the economic data that was available to them. This may shed some light on the current situation regarding inflation, growth and more.
- Mario Draghi talks: Thursday, 13:00. One day after the Fed’s decision, the president of the ECB has yet another public appearance, this time in Frankfurt. Will he contribute to higher volatility? His magic faded lately, but he still has the skill to rock currencies.
- Consumer Confidence: Thursday, 14:00. According to Eurostat, the trust of consumers has eroded in August, falling to -9 points. This is the lowest since April. A small improvement is estimated: -8 points, still in the red.
- Flash PMIs: Friday at 7:00 for France, at 7:30 for Germany and at 8:00 for the euro-zone. Markit’s forward-looking purchasing managers’ indices are released for September for major countries. The numbers will be revised at the beginning of October. According to the final number for August, the French manufacturing sector was still in contraction, with 48.3 points, under the 50 point threshold separating expansion and contraction. A rise to 48.4 is expected. The services sector fared better with 52.3 points and a slide to 52 is predicted now. German manufacturing looked sharp with 53.6 and for September, a small slide to 53.2 is projected. However, the service industry lagged with 51.7 points and here, an advance to 52.2 is estimated. The euro-zone saw 51.7 and 52.8 for manufacturing and services respectively. The manufacturing sector is seen as sliding to 51.5 while no change is likely for services.
- Belgian NBB Business Climate: Friday, 13:00. Despite coming from a small country, the broad survey serves as a barometer for the whole continent. During June and July, the survey was in rare positive ground. Howeve, in August it fell back down to negative territory with -3.1 points. A score of -26 is expected here.
* All times are GMT
EUR/USD Technical Analysis
Euro/dollar kicked off the week above support at 1.1230 (mentioned last week).
Technical lines from top to bottom:
1.1535 is a stepping stone as seen in May 2016 and also beforehand. It is followed by the very round level of 1.15.
1.1460 was a key resistance line in 2015 and 1000 above the multi-year lows. 1.1410 capped the pair in early June. 1.1375 worked as resistance in February and as support in May 2016.
1.1335 worked as the bottom bound of a higher range and then capped recovery attempts in May. 1.1230 capped the pair after the fall in May and worked as resistance.
1.1190 is the post-Brexit high seen in July. 1.1125 cushioned the pair in early September. 1.1070 served as a clear separator of ranges during February and also beforehand.
1.10 is a round number and significant resistance. 1.0905 is the swing low seen in June and serves as a weak support. 1.0825 worked as support in early March 2015 and should also be watched. This is now a triple bottom.
The post-Draghi low 1.0780 replaces 1.08 as support. 1.0710 is the next support line on the chart after temporarily capping the pair in April 2015.
Further below, the 2016 low of 1.0520 and the 2015 low of 1.0460 provide further support.
I remain bearish on EUR/USD
The ECB is still set to introduce some kind of additional stimulus, keeping the euro pressured. The dollar is in control, and unless the Fed goes all-dovish by pushing back rate hikes to 2017, another greenback rally could be seen now.
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