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EURO PRICE FORECAST – TALKING POINTS:

  • The EXY Euro Index shows the currency slipped 1.6 percent so far this year and now trades at its lowest level since June 2017
  • The ECB’s dovish position in response to faltering economic data has put downward pressure on the Euro
  • EUR traders now look to upcoming Eurozone GDP and CPI data in addition to German retail sales for potential signs that provide hope for a rebound higher or confirm recent bearish price action
  • Download the free DailyFX Q2 EUR Forecast for our comprehensive outlook on the Euro over the second quarter

Earlier this month, we highlighted thatthe European Central Bank and Mario Draghi could reignite the currency’s downtrend. Since the prior weekly Euro forecast the EXY Euro Index has dropped roughly 0.9 percent amid weakness particularly against the US Dollar and Japanese Yen.

EXY EURO INDEX PRICE CHART: 1-HOUR TIME FRAME (APRIL 08, 2019 TO APRIL 26, 2019)

EXY Euro Index Price Chart

In response to sustained Eurozone weakness conveyed in the bloc’s dismal economic data, the ECB has grown increasingly dovish as the central bank aims to shore up market confidence and improve eroding EUR fundamentals. Consequently, the Euro is now down 1.6 percent year-to-date.

Next week, however, Eurozone GDP and Inflation data will be released which could provide EUR traders with a reason to celebrate if the high-impact economic readings are reported better than expected.

Although, economic data has generally fallen below consensus as of late – like the ZEW Survey of Expectations, Eurozone Consumer Confidence and PMI numbers to name a few.

Moreover, Eurozone Q4 GDP data was reported 0.1 percent below forecast. That being said, another miss on economic growth will likely cause additional downside in the Euro.

EUROZONE GDP GROWTH CHART: YEAR-OVER-YEAR QUARTERLY TIME FRAME (JANUARY 2016 THROUGH MARCH 2019)

Eurozone GDP Price Chart Year over Year

EURUSD will be worth watching considering US GDP released last week smashed expectations by a full percentage point – further divergence in economic performance between the US and Eurozone has potential of extending recent downside in spot prices.

Although, the Federal Reserve’s FOMC meeting on Wednesday could weigh heavily on the currency pair. Also, the possibility of a flare up in trade relations between the US and EU remains a risk that could threaten bullish Euro prospects.

FOREX ECONOMIC CALENDAR – EURO

Euro economic calendar chart

Visit the DailyFX Economic Calendar for a comprehensive list of upcoming economic events and data releases affecting the global markets.

Also, EURJPY should be kept on every trader’s radar considering next week’s potentially market-moving data happens to be scheduled for release during Japan’s Golden Week where the country’s financial markets will be closed all week in observation of its 10-day stretch of holidays.

The lack of Japanese liquidity heightens the risk of possible flash crashes which could become even more likely if Eurozone GDP drastically disappoints.

OTHER FORECASTS

GBP - British Pound Price Outlook Choppy as Brexit Talks Share Spotlight with BOE Meeting

USD - US Dollar May Rise Further as a Cautious Fed Spooks Markets

GOLD - A Week Packed Full of Major Risk Events and Data

- Written by Rich Dvorak, Junior Analyst for DailyFX

- Follow @RichDvorakFX on Twitter