Euro Forecast: EUR/USD Price Outlook Still Positive, Reaching for 1.22
Fundamental Euro Forecast: Bullish
- Friday’s dire US non-farm payrolls figure sent EUR/USD up sharply and if it can make a sustained break above resistance at 1.2150 then a further advance towards 1.22 seems likely.
- US jobs aside, the global economy is still recovering strongly from the slump caused by the Covid-19 pandemic and that should continue to benefit ‘risk-on’ currencies like the Euro.
Euro price outlook still positive
EUR/USD advanced strongly Friday after the shockingly poor US non-farm payrolls data and now looks well placed to hit 1.22 as long as it can make a sustained break above the 1.2150 high recorded on April 29. Note that 1.22 is principally of psychological rather than technical importance but if there is another strong move higher there is a technical level to watch out for too: the 1.2243 high reached on February 25.
EUR/USD Price Chart, Daily Timeframe (December 23, 2020 – May 7, 2021)
Source: IG (You can click on it for a larger image)
EUR/USD was lifted back above 1.21 Friday by Dollar weakness after the US employment data, which pushed any tightening of US monetary policy even further into the distant future. However, the global economic outlook remains bright as the recovery from the slump caused by the coronavirus pandemic continues, and that will likely benefit “risk-on” currencies like the Euro against the safe-haven Dollar.
There is also continuing speculation that the European Central Bank is already thinking about tapering its monetary stimulus measures, although the idea that it will start tapering next month seems premature. Nonetheless, that too should keep EUR/USD buoyant.
ZEW the highlight in the week ahead
Turning to this week’s data, the calendar is relatively bare, with Tuesday’s release of the German ZEW economic sentiment index for May the most likely to move the markets. The consensus is for a small rise to 71.0 from April’s 70.7. Otherwise, German and French final inflation figures for April are due Wednesday, as are Eurozone industrial production statistics for March.
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--- 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.