Eur/usd - page 238
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On Yesterday session the EURUSD rallied on the back of unexpectedly weak U.S retail sales data. The pair is taking a pause to breathe, on an aggressive pullback we could go to 1.0835 and a break below the 1.05 handle we should continue to the next level of 1.04.
Weak euro to help European companies, force U.S. rivals to adapt
The euro's slide toward parity with the dollar will provide a much-needed boost for European companies this year and force U.S. rivals to adapt their businesses or risk losing market share.
While currency hedging arrangements mean the benefits may not be seen straight away, the currency's weakness has already cheered European chief executives by making their products cheaper overseas and lifting the value of dollar-based sales.
"We have been handicapped by the strength of the euro, but now it seems that the wind is turning and we intend to make the most of this very positive currency effect that will help us deliver a nice increase of our sales and our profits in 2015," Jean-Paul Agon, CEO of French cosmetics group L'Oreal (PA:OREP) told investors last month.
Other companies predicting a tail wind from the around 20 percent drop in the value of the euro over the past six months to $1.06 on Friday include jet manufacturer Airbus (PA:AIR), German car and truck maker Daimler (DE:DAIGn) and French engineering groups Schneider Electric (PA:SCHN) and Alstom (PARIS:ALSO).
Some U.S companies also see positives from the weaker euro, including lower borrowing costs, better performance at European units which export, stronger demand from Euro zone-based customers and, for the leisure sector, increased travel into the continent.
However, most U.S. groups that discussed the currency in recent weeks including Apple (O:AAPL), Dupont (N:DD), Priceline (O:PCLN), Caterpillar (N:CAT) and General Electric (N:GE), have warned they may face headwinds in Europe and elsewhere, and some, including Xerox (N:XRX), have cut earnings guidance as a result.
These companies have said they are now looking to cut costs, increase the portion of inputs they source from inside the euro zone and adopt new pricing policies, to try and maintain market share and margins.
"U.S. companies exporting goods to Europe could face margin pressure from price adjustments or promotions in Europe," said James Targett, analyst at Berenberg.
With euro weakness likely to persist due to the European Central Bank's quantitative easing program and a likely hike in U.S. interest rates on the back of a stronger U.S. economy, longer term planning is a must.
"You have to think about where your revenues are, where your manufacturing is and where you're buying your raw materials from," he added.
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price actually succeeded to close under 1.050. but still in the range of the support line. I will have to wait for the open price of next week.
EUR/USD forecast for the week of March 16, 2015
The EUR/USD pair broke down during the course of the week slicing through the 1.05 level at the end of the Friday session. Because of this, looks like the market is ready to continue going much lower, and a break down below the bottom of the range should send this market looking for the parity level given enough time. Ultimately, if we rally at this point in time it should just simply be thought of as value in the US dollar as it is the favored currency by Forex traders around the world.
EUR/USD; Further Loses Ahead; Positioning Not A Hinder – Danske
So, the euro is recovering, isn’t it? Well, perhaps not for too long. The general downtrend seems to be intact.
The team at Dankse explain why more losses are awaiting EUR/USD:
Here is their view :
“We have been forecasting EUR/USD to fall in H1 and bounce in H2. That is still our base case. The strong US February non-farm payrolls figure supports our call that the Fed will hike in June; this has yet to be priced in, driving further USD strength. We are bullish on European GDP growth, forecasting it to rise to 1.5% in 2015. However, this is unlikely to help the EUR before the ECB has been successful in fighting deflation. We expect diverging inflation and monetary policy will drive EUR/USD lower over the coming 3-6 months. We are reviewing our EUR/USD forecasts in light of recent developments.
Clearly, short EUR/USD positioning has increased in recent days following the collapse in spot, but we do not see positioning as hindering more EUR/USD losses.
Technically, the break below the 61.8% Fibonacci retracement of the move from 0.8228 to 1.6040, at 1.1212, opens the door for further losses ahead of 1.0071.
Psychologically, parity at 1.00 attracts.”
source
EUR/USD weekly outlook: March 16 - 20
The euro dropped to 12-year lows against the dollar on Friday as mounting expectations for higher U.S. interest rates bolstered investor demand for the greenback.
EUR/USD hit lows of 1.0462, the weakest since January 9, 2003 before pulling back to 1.0496 in late trade, still down 1.31% for the day.
The single currency had already weakened broadly this year after the European Central Bank unveiled a trillion-euro quantitative easing program in January.
The euro turned sharply lower after the bank started asset purchases on Monday, pushing euro area bond yields to new lows.
Lower bond yields make the single currency less attractive to investors at a time when expectations are building that the Fed could start rising interest rates mid-year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, advanced 1.22% to 100.32 late Friday, a level last reached in April 2003.
Sentiment on the euro was also hit by uncertainty over Greece’s future in the euro zone, after euro area finance ministers rejected proposed economic reforms put forward by Athens in exchange for more loans.
The euro was also lower against the pound, with EUR/GBP at 0.7116, holding above the seven-year low of 0.7013 set on Wednesday. The common currency fell to a 20-month low against the yen, with EUR/JPY hitting lows of 126.91 before easing back to 127.36 at the close.
In the week ahead, investors will be focusing their attention on Wednesday’s Federal Reserve policy statement to see if it would drop its reference to being patient before raising rates. Tuesday’s ZEW report on German economic sentiment will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Friday, as there are no relevant events on this day.
Monday, March 16
In the euro zone, Germanys Bundesbank is to publish its monthly report.
The U.S. is to produce reports on industrial production and manufacturing activity in the New York region, as well as private sector data on the housing market.
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Since the beginning of this year EURUSD has fallen more than 13.20% and is in a strong bearish phase. The pair fell during Friday’s session printing a new low at 1.0462 and closed near the low of the day and no hard support in sight. Stochastic is showing an oversold market setting higher lows and price is making lower lows, signs that the downside may begin to get exhausted and ready for pullback.
EUR/USD: Euro Spots Chance for Rebound Ahead of FOMC
he European currency jumped against the greenback on Monday, as investors received support from European Bank officials during the weekend, while bulls enjoyed an additional boost from discouraging US manufacturing data.
At a conference in Cernobbio, European Central Bank (ECB) Governing Council member and Bank of Italy Governor Ignazio Visco said that there were risks the program could overshoot its goal, while adding that "it is beyond doubt that the strength of the exchange rate decline is larger than we had expected."
The EUR/USD cross jumped 1.08% to trade at $1.0601, rising almost 150 pips from the twelve-year low at $1.0460 seen Friday, while the US dollar index plummeted 0.90% to 99.424 on Monday.
FOMC looms
However, the upcoming Federal Reserve (Fed) meeting is considered the major influence on further cross development amid ongoing debate on the Fed's changing vocabulary. Central bank policymakers are expected to drop the word "patience" from their forward-guidance language amid increasing speculation that the bank will raise its rates in June.
"The Fed dominates this week, and the concern among some in the market is that the dollar has gone too fast too soon, that this could affect the Fed's inflation goal," Western Union Business Solutions analyst Joe Manimbo said.
Downbeat manufacturing updates
Earlier in the morning, Empire State manufacturing reached 6.90 points in March, a worsening from February's 7.78, a fresh report showed. Moreover, the reading showed a decline for the third consecutive month.
Industrial production inched up 0.1% in February and missed the estimate of 0.2% growth, following a revised 0.3% drop in the previous month while, the capacity utilization fell to 78.9% in February, from 79.4% seen during the previous month.
Finally, National Association of Home Builders posted its index for March, which came at 53 points, worse than the anticipated 57 points, and falling to an eight-month low.
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Euro steady after rebounding from 12-yr lows, Fed in focus
The euro held firm on Tuesday after soft U.S. data and nerves ahead of this week's Federal Reserve policy meeting braked the dollar's rally and helped the common currency pull out from 12-year lows.
The euro was steady at $1.0568, having rebounded overnight from $1.0457, its lowest since 2003.
The euro has been under pressure since the European Central Bank activated its 1 trillion euro bond-buying quantitative easing scheme last week and drove euro zone bond yields to record lows.
It got some relief after Monday's weaker-than-expected U.S. manufacturing, industrial output and housing data pushed down U.S. debt yields and cooled the dollar's advance.
Traders see the market getting little nervous ahead of the Fed's policy-setting meeting on Tuesday and Wednesday.
Expectations have been rising that the Fed will drop the word "patient" from its statement on the timing of interest rate increases - which has fanned expectations for tightening as early as June and helped prompt the dollar's recent surge.
But some traders have also cautioned that the dollar's strength and its potential negative impact on the economy might be mentioned by the Fed.
"The focal point for the Federal Open Market Committee meeting still remains whether 'patient' will be dropped or not, and another word might be used as a replacement," said Junichi Ishikawa, market analyst at IG Securities in Tokyo.
"But the dollar's recent strength, which is very much a political factor as well, may also get a mention and hurt dollar longs. It is a factor that participants will be keeping at the back of their minds," he said.
Participants will also keep an eye on how other asset markets react to the Fed's statement and comments from its chair Janet Yellen after the meeting.
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European February Car Sales Rise With Economy Bolstering VW Demand
European car-sales growth accelerated in February as signs of a strengthening economic expansion in the region, a global drop in fuel prices and dealer discounts encouraged purchases at Volkswagen AG, BMW AG and Renault SA.
Registrations climbed 7 percent from a year earlier to more than 958,100 vehicles, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said in a statement Tuesday. Two-month deliveries rose 6.6 percent to just under 1.99 million cars, following January’s 6.2 percent gain.
Economic confidence in the countries using the euro rose to a seven-month high in February, helped by anticipation of European Central Bank monetary stimulus and a decline in oil prices. The ECB earlier this month raised its euro zone gross-domestic product growth forecast to 1.5 percent for 2015 from an earlier prediction of a 1 percent expansion.
“European car sales progressed nicely in the first two months,” Juergen Pieper, a Frankfurt-based analyst at Bankhaus Metzler, said by phone before the figures were published. “The growth is faster than expected, and the market may continue to increase about 5 percent this year. Better consumer confidence, the need to replace old vehicles and an improving economic development are helping car sales.”
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