Euro Forecast: Outlook for EUR/USD Positive After ECB and EU Summit
Fundamental Euro Forecast: Bullish
- A quieter week looks in store for Euro traders after the past few days that have included both Thursday’s ECB meeting and the weekend EU Summit.
- However, traders will likely have the 1.15 level in their sights: a high not reached since January 31 last year.
Euro price outlook improving
A quieter week looks likely for Euro traders who have had to navigate both last Thursday’s European Central Bank meeting, where Eurozone monetary policy was left unchanged as expected, and the weekend special meeting of the European Council to discuss a recovery fund for the EU nations hit hardest by the coronavirus pandemic.
Nonetheless, Euro bulls are likely to take aim at the 1.15 level for EUR/USD that was last reached as long ago as January 31, 2019 – unless fears of a second round of Covid-19 infections, an escalation of the various US-China disputes or a run of poor corporate earnings reports lead to a flow of money into safe havens like the US Dollar.
EUR/USD Price Chart, Daily Timeframe (January 7, 2019 – July 16, 2020)
Chart by IG (You can click on it for a larger image)
As the chart above shows, EUR/USD almost hit 1.15 just over four months ago, when it touched 1.1497 on March 9. Since then, trading has been volatile but after the pair’s recent gains it is coming close again.
Week ahead: Flash July PMIs
That said, there are few data points or events to move the Euro in the week ahead. A fifth round of talks between the EU and the UK to discuss their relationship post-Brexit is due to start Monday but there are no important data releases until Thursday, when the GfK market research company is due to report on consumer confidence in Germany, and the Eurozone’s ‘flash’ consumer confidence number for July is released.
Both are expected to show improvements from the month before, as are Friday’s flash July purchasing managers’ indexes for the Eurozone and several of its constituent countries. The key question is whether any of the PMIs, manufacturing, services or composite, will climb back above the 50 level separating expansion from contraction – and if they do that could be the spur needed to launch EUR/USD up to and perhaps beyond the 1.15 mark.
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--- Written by Martin Essex, Analyst and Editor
Feel free to contact me on Twitter @MartinSEssex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.