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: EUR/USD Consolidation Due as ECB and EU Leaders Meet

Euro Forecast: EUR/USD Consolidation Due as ECB and EU Leaders Meet

What's on this page

Fundamental Euro Forecast: Neutral

  • After the past week’s strong advance by EUR/USD, a period of consolidation at the higher levels would be no surprise.
  • Much though will depend on two critical meetings in the week ahead. At one, the European Central Bank will likely ease Eurozone monetary policy still further.
  • At the other, EU leaders gathering for a European Council meeting will discuss Covid-19, climate change and security, but Brexit will be the elephant in the room.

Euro price consolidation due

Last week’s surge in EUR/USD took it well above the 1.20 level that was seen by some commentators as a line in the sand for the European Central Bank: above it, the Eurozone would be uncompetitive and the ECB would intervene – perhaps orally, perhaps directly – to weaken its currency. In reality that seems unlikely; the ECB is more likely to look at the Euro’s value against a range of the currencies of the region’s major trading partners.

Nonetheless, traders are likely to be cautious about pushing EUR/USD higher still and that suggests a short-term period of consolidation for the pair.

EUR/USD Price Chart, Daily Timeframe (June 4 – December 3, 2020)


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

EUR/USD Bearish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 15% -15% 5%
Weekly -2% -13% -5%
What does it mean for price action?
Get My Guide

ECB to ease monetary policy

Note, however, that two important gatherings take place this coming week that could alter the outlook for the Euro longer-term. One is a meeting of the ECB’s Governing Council, which is responsible for Eurozone monetary policy. No change in interest rates is expected but the central bank has already dropped the heaviest of hints that it will ease monetary policy still further as it worries about the outlooks for both economic growth and inflation.

There are several levers it could pull but an increase in its Pandemic Emergency Purchase Program, or PEPP, of around €500 billion is the most likely. It could also extend its Targeted Longer-Term Refinancing Operations (TLTROs) on favorable terms and might even tweak it old Asset Purchase Program (APP). Any such action would normally weaken the Euro but these, of course, are not normal times and anyway an easing of monetary policy this coming Thursday has been very well flagged in advance.

European Council and Brexit

The European Council of EU leaders also meets in the week ahead, with Covid-19, climate change, security and external relations all on the agenda. Notably absent is the subject of Brexit but it is inconceivable that the future relationship between the EU and the UK once the Brexit transition period ends on December 31will not be discussed either formally or informally.

The European Council meeting starts on Thursday in Brussels, and on Friday the leaders will gather again for a Euro Summit that will focus on banking union and the capital markets union.

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

German data due

On the data front, the most important statistic on the calendar is Tuesday’s ZEW economic sentiment index for Germany, and the consensus among economists is that it will fall to 35 from 39 previously. German inflation and industrial production figures are also scheduled, as is the third estimate of third-quarter Eurozone GDP, but these are unlikely to affect the Euro.

If you’d like to know more about how to read an FX economic calendar click here

We look at currencies regularly in the DailyFX Trading Global Markets Decoded podcasts that you can find here on Apple or wherever you go for your podcasts

--- Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex

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