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EUR/USD Forecast August 11-15
EUR/USD fell to lower ground but yet again staged a late recovery to minimize its losses, remaining within the narrowing channel. Will this pattern continue? GDP numbers and a key German survey are the highlights of a busy week. Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD.
ECB President Mario Draghi gave a little for everybody in his press conference: on one hand, he continued seeing inflation returning back to course and was not worried about growth, that looks weak in his country, Italy. On the other hand, he did stress that preparations are intensifying towards a QE program and also explained why EUR/USD should fall. The euro also suffered from weak German industrial numbers and fear of the recent escalation in relations with Russia. In the US, a solid services PMI and encouraging jobless claims numbers supported the USD. However, yet again we have seen profit taking on the greenback late in the week.
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good morning. i think we have to be cautious in buying. i dont think the uptrend will continue long
Europe’s Growth Engine Stutters as Spain Beats Germany
Germany probably underperformed Spain last quarter for the first time in more than five years as the euro-area recovery almost ground to a halt.
After leading the currency bloc out of its longest-ever recession last year, Europe’s largest economy contracted in the three months through June, according to a Bloomberg News survey. The downturn in the region’s powerhouse highlights the fragility of a revival that European Central Bank President Mario Draghi has described as modest and uneven.
The 18-nation euro area is struggling to boost growth and inflation (ECCPEMUY) even amid unprecedented ECB stimulus, with Draghi citing inadequate structural reforms as a key reason. While the German data is distorted by mild winter weather that front-loaded output earlier in the year, Bundesbank President Jens Weidmann has warned the country must also adjust or risk losing its role as a growth engine.
This week’s reports “will probably underline that the problems in the euro zone have moved north,” said Ralph Solveen, an economist at Commerzbank AG in Frankfurt. “The weak recovery will definitely provide the doves in the ECB Governing Council with a weighty argument to demand further expansionary measures.”
German GDP shrank 0.1 percent in the three months through June, the first contraction since 2012, according to the median estimate in the Bloomberg survey. The economies of the euro area and France grew 0.1 percent, separate surveys show. The reports will be published on Aug. 14 along with those for the Netherlands, Austria and Portugal.
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Euro slides as outlook stays downbeat on ECB, Russia worries
The euro fell against the dollar on Monday, giving up Friday's gains, hampered by looming monetary easing from the European Central Bank and worries about the impact of the Russia-Ukraine conflict on Germany, the euro zone's largest economy.
Germany is Russia's largest trading partner in the European Union. EU sanctions announced last month restrict the export to Russia of equipment to modernize the oil industry and prohibit the sale of machinery, electronics, and other civilian products that can be used for military or defense purposes.
Europe's common currency had climbed above $1.34 on Friday as investors covered overextended short positions but the rally proved short-lived given the euro zone's fundamental backdrop. The euro, though, did find support at $1.3350.
"We can see continued euro weakness because of the geopolitical tension on its doorstep," said Alan Robinson, global portfolio advisor at RBC Wealth Management in Seattle.
"However, geopolitical tension could dissipate quickly. And if that were to happen, we might see a relief rally in the euro. I think we have to be a little careful here, as the euro has come down fairly significantly."
In late New York trading, the euro was down 0.2 percent on the day against the dollar at $1.3383. Against the yen, the euro was flat to slightly lower at 136.75 yen.
Net euro short positioning is now at an extreme level, the largest in two years. This week, euro shorts totaled 128,747 contracts, according to data from the Commodity Futures Trading Commission released on Friday.
The dollar, meanwhile, was up 0.1 percent against a basket of currencies at 81.459. It was up 0.2 percent versus the yen at 102.18 yen.
The U.S. currency has caught a bid as Treasury yields edged higher earlier in the session. Benchmark U.S. 10-year yields have recovered from two month-lows hit last Friday and were last at 2.420 percent. Higher yields are an indication a sense of calm has returned to the market after a relatively quiet weekend in Ukraine and the Middle East.
"The greenback has now outperformed most rivals for months as improving U.S. data keep the Federal Reserve on course to raise borrowing rates next year," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
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Thank you for the useful information.
Thank you for the useful information.
EURUSD is in a strong downtrend.
This has been for the better part of three months.
But some say that the bearish evidence is mounting.
The bullish momentum divergence on 4h and daily charts, oversold price action, and the most consolidation we’ve seen since June all increase the likelihood if a short-term bullish correction.
If the August lows are hit below 1.3330, then we sure came shift back to the primary bearish trend.
European Economics Preview: German ZEW Economic Confidence Data Due
Economic confidence survey data from Germany and final inflation figures from Italy are due on Tuesday.
At 2.45 am ET, France current account data for June is due. The current account balance showed a deficit of EUR 3.1 billion in May.
At 3.00 am ET, the Hungarian Central Statistical Office is slated to release consumer prices for July. Consumer prices are forecast to fall 0.1 percent year-on-year in July, following a 0.3 percent drop in June.
Half an hour later, Sweden consumer prices are due from Statistics Sweden. Economists forecast consumer prices to fall 0.1 percent in July from last year after rising 0.2 percent in June.
At 5.00 am ET, Germany's ZEW economic confidence survey results are due. The economic sentiment index is seen at 17 in August, down from 27.1 in July. Likewise, the current conditions index is forecast to fall to 54 from 61.8 in July.
In the meantime, Italy's final inflation data for July is due. According to preliminary estimate, EU harmonized prices remained unchanged in July from last year. On a monthly basis, the harmonized index of consumer prices fell 2.1 percent.
At 6.00 am ET, Statistics Portugal is set to release consumer prices for July. Prices were down 0.4 percent year-on-year in June.
source
German ZEW economic sentiment falls to 20-month low of 8.6 in August
German economic sentiment deteriorated sharply in August, hitting the lowest level since December 2012, industry data showed on Tuesday.
In a report, the ZEW Centre for Economic Research said that its index of German economic sentiment tumbled by 18.5 points to 8.6 this month from July’s reading of 27.1. Analysts had expected the index to decline by 8.9 points to 18.2 in August.
The Current Conditions Index deteriorated to 44.3 this month from 61.8 in July, worse than expectations for a decline to 55.5.
Meanwhile, the index of euro zone economic sentiment plunged to 23.7 in August from 48.1 in July, below expectations for a decline to 41.3.
On the index, a level above 0.0 indicates optimism, a level below 0.0 indicates pessimism.
Following the release of that data, the euro added to losses against the U.S. dollar, with EUR/USD shedding 0.27% to trade at 1.3347, compared to 1.3355 ahead of the data.
Meanwhile, European stock markets remained mixed. Germany's DAX dipped 0.35%, the DJ Euro Stoxx 50 declined 0.15%, France’s CAC 40 slumped 0.4%, while London’s FTSE 100 tacked on 0.1%.
Euro Falls to Almost Nine-Month Low as Confidence Sags
The euro fell toward the weakest since November after investor confidence in Germany slumped to the lowest level since 2012, adding to concern Europe may be entering a Japanese-style deflationary spiral.
A gauge of the dollar was at almost the highest since February before a report tomorrow economists forecast will show U.S. retail sales grew for a sixth month. German bund yields dropped toward 1 percent on bets the European Central Bank’s stimulus measures are insufficient to boost inflation. New Zealand’s currency fell versus most of its major peers after the housing market slowed. South Korea’s won gained.
Recent data including today’s “suggest that conditions are slowing down pretty rapidly now in Europe,” Robert Sinche, a global strategist at Stamford, Connecticut-based brokerage Pierpont Securities LLC, said in an interview on Bloomberg Radio’s “Surveillance” with Tom Keene. “There is decreasing degrees of freedom for the ECB -- they’ve pulled about as many conventional levers as they can.”
The euro depreciated 0.3 percent to $1.3351 as of 8:55 a.m. New York time, after reaching $1.3333 on Aug. 6, the lowest since Nov. 8. The 18-nation shared currency weakened 0.3 percent to 136.44 yen. The U.S. currency was little changed at 102.18 yen.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 developed-market peers, added 0.1 percent to 1,022.39. The gauge touched 1,024.67 on Aug. 6, matching the highest since Feb. 11.
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