News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Bearish
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Bearish
More View more
Real Time News
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here:https://t.co/1oygcFMFNs https://t.co/C2rRzTLN03
  • As the clock is ticking on US Presidential Election – an event that is highly important and may carry significant amount of uncertainty. Will you ride the volatility or stay on the sideline until the political skies are cleared in November? https://t.co/5EXpzyXHct
  • Wall Street Futures edged higher at Asia opening hours: Dow Jones (+0.12%) S&P 500 (+0.13%) Nasdaq 100 (+0.13%) [delayed] -BBG
  • Join @DanielGMoss's #Webinar at 10:00 PM ET/2:00 AM GMT for his weekly coverage of trading prep for $AUDUSD in the week ahead. Register here: https://t.co/wi1qabrtHJ https://t.co/bmOoBpGlZs
  • $AUDUSD dipping in morning APAC trade following a speech from #RBA Governor Guy Debelle He mentioned that an option possibly being considered for other policy prescriptions is to buy bonds 'further out along the curve' (relatively dovish) https://t.co/JXQktfCrj0 https://t.co/Xbyhuuy5b6
  • RBA's Debelle: 'Mixed' empirical evidence on negative rates, TFF increase is substantial easing of monetary policy -BBG #RBA $AUDUSD
  • RBA's Debelle: Lower #AUD would benefit economy, watching closely. FX intervention not effective in current circumstance -BBG $AUDUSD #RBA
  • RBA Deputy Governor Debelle: Reducing yield target, TFF rate possible policy option. RBA continues to assess other policy options -BBG
  • An economic calendar is a resource that allows traders to learn about important economic information scheduled to be released. Stay up to date on the most important global economic data here: https://t.co/JdvW6HNuqV https://t.co/QwmBEeg3A4
  • Heads Up:🇦🇺 RBA Debelle Speech due at 00:30 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-09-22
Euro Weekly Forecast: ECB Stimulus Primed and Ready as Outlook Sours

Euro Weekly Forecast: ECB Stimulus Primed and Ready as Outlook Sours

2019-07-28 02:00:00
Nick Cawley, Strategist
Share:
EURUSD

Euro Price Fundamental Forecast: Bearish

Q3 2019 Euro Forecast and Top Trading Opportunities

Euro Upside Capped as ECB Prepares to Stoke the Ailing Euro-Zone Economy

The fundamental outlook for the Euro is negative and is likely to remain that way in the weeks to

come after ECB President Mario Draghi signaled on Thursday that the central bank was ready to cut interest rates even further into negative territory and re-start the recently finished bond buying program (QE). In the press conference after the ECB monetary policy meeting, President Draghi highlighted that the outlook for the EZ manufacturing sector is ‘getting worse and worse’ and that the ECB would embark on a range of highly accommodative measures to boost growth and stubbornly low inflation.

These comments mirror recent data released in the Euro-Zone which saw manufacturing sentiment in Germany – the single blocks historical economic powerhouse - at multi-year lows. Inflation also remains lowly and Draghi, who leaves the ECB at the end of October, has decided to ready the market for another liquidity flush at the September ECB meeting, when the central bank’s staff projections for inflation and growth will also be released. The deposit rate is likely to pushed even further into negative territory from its current rate of -0.40%, while the bond buying program will likely be re-started in a further effort to kick-start growth and inflation. The German bond curve – the de-facto ECB benchmark – is currently trading with negative yields all the way out to 20-years, while the German 30-year long-bond offers a paltry 22 basis points of yield.

German Bond Yields

Against this background it will be very difficult for the Euro to push higher from its current levels, although EURUSD may get a small boost on Wednesday next week when the Fed starts cutting interest rates, with a 0.25% cut fully expected and a 0.50% cut a possibility. EURUSD has already probed the 27-month low at 1.1107 and is expected to re-test this level in the near-term, unless the Fed surprises and cuts interest rates by 0.50%. A move to EURUSD 1.1000 cannot be discounted in the short-term.

EURUSD Price Daily Chart (December 2018 – July 26, 2019)

EURUSD Price Chart

Professional speculators remain short of the Euro, especially leveraged funds, while non-commercial funds have reduced their short positions in the last 3-4 months.

Euro Market Positioning

The IG Client Sentiment Indicator shows EURUSD traders are 74.3% net-long with the ratio of traders long to short at 2.89 to 1. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggest EURUSD may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EURUSD bearish contrarian trading bias.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on EURUSD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES