Skip to Content
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. See our updated Privacy Policy here.

Free Trading Guides
Please try again

Live Webinar Events


Economic Calendar Events


Notify me about

Live Webinar Events
Economic Calendar Events






More View More
Euro Forecast: Outlook for EUR/USD Increasingly Bearish

Euro Forecast: Outlook for EUR/USD Increasingly Bearish

What's on this page

Fundamental Euro Forecast: Bearish

  • EUR/USD continues to trade in a narrow range but as fears grow of a second wave of coronavirus infections a break to the downside is looking more and more likely.
  • For now, those fears are outweighing hopes of an easing of coronavirus restrictions that could allow normal economic activity to resume.
  • That in turn means funds will likely flow into haven assets such as the US Dollar at the expense of riskier assets like the Euro, the Australian Dollar, the British Pound and stocks.

EUR/USD downturn possible

EUR/USD continues to trade sideways but a breakout is looking increasingly possible as traders weigh up fears of a second wave of coronavirus infections against an easing of restrictions in many countries that could allow a return of normal economic activity.

For a while now, an increase in Covid-19 concerns has prompted a flow of money into safe havens like the US Dollar from currencies seen as inherently riskier, such as the Euro. Any ramping up of pessimism about an economic revival would therefore likely see EUR/USD break to the downside.

EURUSD Price Chart, Four-Hour Timeframe (March 4 – May 16, 2020)


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

EUR Forecast
EUR Forecast
Recommended by Martin Essex, MSTA
Download our fresh Euroforecast for the remainder of Q2
Get My Guide

The weakness of the Eurozone economy was highlighted Friday by news that the German economy is now in recession, contracting by 2.2% quarter/quarter in the second quarter of the year after a 0.1% decline in the first. Note though that the German figures were better than those for the Eurozone as a whole, which contracted by 3.8% – implying very steep downturns in countries like France, Italy and Spain.

As for the third quarter, that is likely to be even worse given that lockdowns continued in to April and early May.

Moreover, post-Brexit trade talks between the UK and the EU continue to make little progress. That will likely hit the British Pound harder than the Euro but is still another negative factor for EUR/USD.

Want to know why GDP data are deemed highly significant in the FX market? Check out our guide here.

Week ahead:

Turning to the economic data in the week ahead, Tuesday brings the ZEW indicator of German economic sentiment in May and another poor figure is expected. Similarly, purchasing managers’ indexes for France, Germany and the Eurozone in May, due Friday, are expected to continue to show the weakness that was evident in April.

Starts in:
Live now:
Nov 28
( 03:11 GMT )
Recommended by Martin Essex, MSTA
Weekly Commodities Trading Prep
Register for Webinar
Join Now
Webinar Has Ended

--- 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.