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.

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
Subscribe
Please try again
More View more
Real Time News
  • The Japanese Yen remains in focus with strength potential on risk aversion themes to go along with weakness on themes around higher rates. Get your weekly $JPY technical forecast from @JStanleyFX here: https://t.co/l4UICqJzJy https://t.co/dQ2pS0E4fp
  • Google finance-related search interest in 'Evergrande' has almost overtaken 'Covid'. 'Taper' doesn't even register on the scale https://t.co/P6H9sHFVIB
  • Gold prices gain as potential systemic risks out of China's Evergrande Group roil broader markets. Meanwhile, iron ore is ticking higher after a big drop on Monday as China steps up steelmaking curbs. Get your market update from @FxWestwater here:https://t.co/l4kAWDJ2wm https://t.co/b9m5ADIqqb
  • Gold remains higher despite positive Evergrande news out of China. Meanwhile, copper bulls are pushing prices upward as the potential for a housing crisis in China ebbs. Get your market update from @FxWestwater here:https://t.co/TK3MNntBdA https://t.co/14UKjR4w6M
  • GBP/USD has flattened overnight after its strongest rally in a month on Thursday. The British currency has been under pressure recently as an energy crisis has caused a number of gas providers to go bankrupt. Get your market update from @HathornSabin here:https://t.co/3D8s2eIVWv https://t.co/JDGNwKYyOn
  • Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. Learn about the shooting star candlestick and how to trade it here: https://t.co/mfwJ0sIauS https://t.co/JIT5it2HAt
  • Gold could suffer further near-term losses due to rising U.S. Treasury yields and a weak technical picture for price action. Get your weekly gold forecast from @DColmanFX here: https://t.co/g9QvH3L4It https://t.co/Vz98E0Bl9U
  • Gold has been trending lower after failing to clear resistance in the $1835 area earlier this month. Get your $XAUUSD market update from @DColmanFX here:https://t.co/3hm1g3BHgf https://t.co/MdTQKEBCBx
  • Key break here in the 10-year #Treasury yield as it rises to the highest since late June Took out 1.4230 resistance, and the 100-day SMA Eyes now on the 38.2% Fib extension at 1.4775 Also potential falling resistance from March https://t.co/4cI6l210ui
  • The move in rates after this week’s FOMC has continued and the 10 year yield has pushed up to a fresh two-month-high. Get your market update from @JStanleyFX here:https://t.co/CRWhuZ3sxD https://t.co/svHHqN2Zz8
Euro Week Ahead Forecast: EUR/USD Outlook Bullish, EUR/GBP Bearish

Euro Week Ahead Forecast: EUR/USD Outlook Bullish, EUR/GBP Bearish

Martin Essex, MSTA, Analyst

Fundamental Euro Forecast: Mixed

  • The European Central Bank left all its monetary policy settings unchanged last week and its president, Christine Lagarde, said little new at her virtual press conference after the decision.
  • That, unsurprisingly, left the Euro unmoved and the outlook as it was.
  • Significantly, though, EUR/USD now looks to have broken to the upside after its falls earlier this month while EUR/GBP has broken to the downside: trends that will both likely continue in the week ahead.
Advertisement

Euro well placed to gain against the US Dollar

The broad risk-on move in the financial markets looks set to continue in the week ahead as optimism rises that US President Joe Biden will be able to push all or most of his stimulus program through Congress, that there will be an orderly transition of power in the US, and that the coronavirus vaccine rollout globally will boost economic growth.

As ever, that will likely mean a flow of money out of the safe-haven US Dollar into other currencies, including both the Euro and the British Pound. This continues to be a worry for the European Central Bank, which has made clear that it does not want the Euro to strengthen.

A comment that it will “continue to monitor developments in the exchange rate” was left out of its statement issued after it left all its monetary policy settings unchanged last Thursday but any thoughts that this marked a significant change were revised when the comment was included in ECB President Christine Lagarde’s statement opening her post-decision virtual news conference.

EUR/USD will therefore likely continue to rise, with the chart below showing a break higher from the minor downward trend that began on January 7.

EUR/USD Price Chart, Daily Timeframe (July 27, 2020 – January 21, 2021)

Euro Week Ahead Forecast: EUR/USD Outlook Bullish, EUR/GBP Bearish

Source: IG (You can click on it for a larger image)

However, the Euro continues to underperform other currencies and, while EUR/USD has broken higher, EUR/GBP has broken lower and that too is a trend that will likely continue.

EUR/GBP Price Chart, Daily Timeframe (May 18, 2020 – January 21, 2021)

Euro Week Ahead Forecast: EUR/USD Outlook Bullish, EUR/GBP Bearish

Source: IG (You can click on it for a larger image)

Looking for an FX trader’s guide to the ECB? We have one here

In fact, while traders will inevitably concentrate on EUR/USD, the world’s most traded currency pair, the Euro has been losing ground not just against Sterling but against other currencies generally, so traders bullish EUR/USD will need to be cautious when trading Euro crosses in the days ahead.

Euro Trade-Weighted Index Chart (October 20, 2020 – January 21, 2021)

Euro Week Ahead Forecast: EUR/USD Outlook Bullish, EUR/GBP Bearish

Source: ECB (You can click on it for a larger image)

Week ahead: German Ifo, inflation, unemployment and GDP

Turning to the economic data in the week ahead, it is a big week for German statistics, beginning with the Ifo index Monday, although that is expected to be little changed in January from the month before. Inflation figures Thursday will be the next focus of attention, with analysts forecasting a rise to 0.7% year/year in January, up from minus 0.3% the month before. Consumer confidence, unemployment and the “flash” measure of GDP in the fourth quarter are also on the economic calendar.

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.

DISCLOSURES