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.

Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Mixed
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Market snapshot: US equity futures pointing higher while FX markets remain mixed
  • (Asia AM) The #SP500 shrugged off risk aversion to end last week higher, but upside momentum seems to be fading. US markets are offline today, raising the risk of volatility - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2020/05/24/SP-500-Struggling-at-Resistance-Volatility-Risk-Ahead-Elevated.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/RJXBa0tyS5
  • LIVE NOW: In this session, Strategist @DavidJSong will discuss trading strategies for the top event risk in the week ahead https://www.dailyfx.com/webinars/175202251
  • LIVE IN 30 MIN: In this session, Strategist @DavidJSong will discuss trading strategies for the top event risk in the week ahead https://www.dailyfx.com/webinars/175202251
  • The possibility of a Covid-19 cure by year end keeps market sentiment high despite ongoing political tensions. Get your $USDMXN market update from @HathornSabin here: https://t.co/6DIf6krA3E https://t.co/IxeRbjHpQm
  • Join analyst @DavidJSong at 6:30 PM ET/10:30 PM GMT for your weekly update on key news trading events. Register here: https://t.co/gBlrRpCc55 https://t.co/qqWZkK1G8B
  • The commodity currencies, AUD, CAD, and NZD, which typically benefit from their higher yield profile relative to other currencies (the carry trade), no longer hold this advantage. Get your #currencies market update from @CVecchioFX here: https://t.co/3oWXhp0hCX https://t.co/qOgXnf0JKK
  • The long-term outlook for the Euro has been boosted significantly by a Franco-German proposal for a €500 billion coronavirus Recovery Fund, even though an agreement is not yet close. Get your $EURUSD market update from @MartinSEssex here: https://t.co/onP43pXuDi https://t.co/nynDJ9P6br
  • On Friday, EUR/GBP surged to an over six-week high at 0.8940 then closed the weekly candlestick in the green with a 2.3% gain. Get your $EURGBP market update from @malkudsi here: https://t.co/ln09Ijn7rd https://t.co/OCe7fzGGC0
  • The Canadian Dollar has proven stable in recent weeks following a dramatic turn lower in March, guided to the downside by energy markets. Get your $USDCAD market update from @CVecchioFX here: https://t.co/7tlrn74X3t https://t.co/OGqZzWaxU4
Euro Forecast: Outlook for EUR/USD Still Bearish

Euro Forecast: Outlook for EUR/USD Still Bearish

2020-04-26 03:00:00
Martin Essex, MSTA, Analyst
Share:
EURUSD Price Chart

Source: IG Charts

Fundamental Euro Forecast: Bearish

  • Last week’s video conference of members of the European Council to discuss the EU’s response to the Covid-19 outbreak again highlighted the slow pace and complexity of decision making by the bloc’s leaders.
  • Combined with a crash in IHS Markits composite purchasing managersindex for the Eurozone in April to 13.5, by far its lowest reading since the survey began in mid-1998, its hard to see anything other than a further decline in the Euro.

Euro price at risk of further losses

The latest purchasing managers’ indexes for April, released late last week, were uniformly bad, confirming that the global economy will be hit hard by the Covid-19 pandemic. However, the PMIs for the Eurozone still stood out as particularly weak, with the composite index for the region down to 13.5 – by far its lowest reading since the survey began in mid-1998 and considerably below all forecasts in a poll by the Reuters news agency.

The data led IHS Markit, which compiles the figures, to comment that they are “indicative of the Eurozone economy contracting at a quarterly rate of approximately 7.5%” and that “the second quarter looks set to record the fiercest downturn the region has seen in recent history”.

If confirmation were needed, it came from the GfK measure of German consumer confidence, which plummeted to minus 23.4 from a positive 2.3 the month before; way below the forecast -1.7.

Against this background, it was no surprise that EUR/USD continued to slide lower and there are no signs yet that the coming week will see a reversal of the trend unless there is an unexpected burst of market optimism that sparks a flight from the relative safety of the USD into riskier currencies like the EUR.

EUR/USD Price Chart, Daily Timeframe (November 18, 2019 – April 23, 2020)

EURUSD Price Chart

Chart by IG (You can click on it for a larger image)

EUR/USD MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 24% -14% -3%
Weekly -25% 75% 16%
What does it mean for price action?
Get My Guide

At the same time, the sluggish pace of Eurozone decision making came into focus again last week as EU leaders met once more, by video conference, to decide on the EUs response to the Covid-19 outbreak. It was the fourth video meeting of its kind and was intended to agree on joint action, with the focus on the single market, investment efforts, global action and on better governance and resilience.

This contrasted with far swifter action to combat the economic impact of the pandemic by countries such as the US and the UK, and provided another reason to be pessimistic about the outlook for the Euro.

Week ahead: ECB meeting in focus

Turning to the economic events scheduled for this week, the spotlight will be on Thursday’s meeting of the European Central Bank. It is almost certain to keep all its key interest rates unchanged but, as ever, it will be the accompanying commentary that could potentially move the markets.

As for the economic data, there are plenty of figures that would normally affect exchange rates but in these exceptional times none will likely do so. The numbers include German retail sales Monday, Eurozone confidence and German inflation Wednesday, and a raft of statistics Thursday including French and Italian first-quarter GDP, German and Eurozone unemployment, and Eurozone inflation.

Starts in:
Live now:
May 26
( 10:05 GMT )
Recommended by Martin Essex, MSTA
Trading Sentiment
Register for webinar
Join now
Webinar has ended

Dollar, Gold, Yen: What are the Top Safe Havens of 2020?

--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below

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

DISCLOSURES

News & Analysis at your fingertips.