Eur/usd - page 158
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EUR/USD Forecast Sep. 15-19
EUR/USD dived to lower levels, but it was certainly not a one way street. Has it bottomed out? The big events coming up are a German survey and final inflation data for August. Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD, now on lower ground.
The echoes from Draghi’s rate cuts and ABS continued weighing on the euro, as more analysts see the euro as a funding currency., but on the other hand, industrial production was strong and so was the German trade balance. In the US, the JOLTS number was OK, while jobless claims disappointed and retail sales beat. The greenback showed strength against many currencies, but the euro held up relatively well.
Updates:
* All times are GMT
source
EUR/USD weekly outlook: September 15 - 19
The euro pushed higher against the dollar on Friday, but remained within striking distance of 14-month lows as the prospects of an early hike in U.S. interest rates continued to underpin investor demand for the greenback.
EUR/USD was up 0.33% to 1.2964 late Friday, holding above the 14-month trough of 1.2858 reached on Tuesday.
The pair was likely to find support at the 1.29 level and resistance at around 1.3015.
Expectations that the Federal Reserve is growing closer to raising interest rates continued to support the dollar, with the European Central Bank likely to stick to its looser monetary policy stance.
A study by the San Francisco Fed published on Monday indicated that central bank officials see rates rising sooner than markets expect.
The Fed was expected to cut its asset purchase program by another $10 billion at its upcoming policy meeting next week which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.
Data on Friday showing that U.S. retail sales rose in August and another report showing that consumer sentiment rose to a 14-month high in September underlined the view that the economic recovery is deepening.
The single currency has remained under pressure since the ECB unexpectedly cut rates to record lows on September 4 and unveiled new easing measures in a bid to shore up inflation in the euro area.
The euro rose to two month highs against the weaker yen on Friday, with EUR/JPY up 0.56% in late trade. For the week the pair gained 2.17%.
The yen fell to more than six year lows against the dollar on Friday amid expectations for more stimulus from the Bank of Japan.
BoJ Governor Haruhiko Kuroda said Thursday that the bank would be prepared to immediately loosen monetary policy or implement other measures if its 2% inflation target becomes difficult to meet.
In the week ahead, investors will be focusing on the outcome of Wednesday’s Fed policy meeting. Fed Chair Janet Yellen was to hold a press conference following the meeting. Tuesday’s report on the ZEW German business sentiment index will also be closely watched.
Election Throws Sweden Into Turmoil as Nationalists Advance
Sweden’s election threw the nation’s political establishment into turmoil as backing for the anti-immigration Sweden Democrats more than doubled, leaving the largest Nordic economy facing a hung parliament.
The three-party Social Democratic opposition led byStefan Loefvenwon 43.7 percent, versus 39.3 percent for the four-party government of Prime Minister Fredrik Reinfeldt, with 99.8 percent of the vote counted. The Sweden Democrats garnered 12.9 percent to become the third largest party.
The result, which sent the krona lower, marks an end to eight years of rule by Reinfeldt’s conservative-led coalition, which delivered successive rounds of tax cuts without adding to Sweden’s debt. The premier said he will hand in his resignation today as the responsibility of forming a new government falls to the Social Democrats, which won the most votes.
“We have a new unique parliamentary situation in Sweden,” Loefven said at an election-night party. He vowed to keep the Sweden Democrats from influence, opening the doors to government parties to “put the interest of Sweden first.”
Traders and investors have been bracing themselves for market turbulence amid signs the election would fail to produce a clear winner.
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EURUSD rose during the course of last Friday session, but the 1.30 level has offered resistance yet again. However, on the weekly chart we have formed a hammer so if the pair can get above the 1.30 level this market will break out to the upside and head towards the 1.3250 level.
Euro Retreats Against Majors
The euro retreated from its early highs against its major counterparts in European deals on Monday, as weak data out of China triggered a sell-off in riskier assets, ahead of the Federal Reserve's monetary policy meeting this week.
China's industrial production rose 6.9 percent year-over-year in August following the 9 percent rise in July, with growth slowing for the second straight month and hitting its slowest pace in over 5 years, official data showed over the weekend.
The data raised fears over slowdown in the world's second largest economy, which struggles to reach its annual 7.5% economic-growth target.
Traders await the Fed's 2-day meeting beginning on Tuesday, at which it is expected to reduce its asset purchase program further by $10 billion. Traders are paying close attention to Fed's statement for any material shift in their language regarding outlook for interest rates.
The Eurozone trade surplus decreased for the second straight month in July, Eurostat reported.
The trade surplus fell unexpectedly to a seasonally adjusted EUR 12.2 billion from EUR 13.8 billion in June. The surplus was forecast to rise to EUR 15.5 billion.
Exports fell 0.2 percent from June after declining 0.3 percent. Meanwhile, growth in imports accelerated to 0.9 percent from 0.6 percent.
The euro, which closed last week's deals at 1.2957 against the greenback, reached as low as 1.2915. This may be compared to an early high of 1.2970. If the euro continues its downtrend, it may find support around the 1.28 zone. The euro eased to 0.7944 against the Sterling, after having advanced to a 5-day high of 0.7983 at 12:00 am ET. On the downside, the euro is poised to challenge support around the 0.786 region.
The average asking price for a house in the United Kingdom jumped 0.9 percent on month in September, property tracking website Rightmove said - standing at 264,875 pounds.
That follows the 2.9 percent contraction in August.
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The dollar traded mixed against its major pairs G10 this monday morning, with no significant economic events. Appreciated against the EUR, NOK and CHF, in that order, and devalued as the GBP, CAD and NZD. The dollar was stable against the JPY, CHF and SEK.
Eurozone Trade Surplus Falls In July
The Eurozone trade surplus decreased for the second straight month in July, Eurostat reported Monday.
The trade surplus fell unexpectedly to a seasonally adjusted EUR 12.2 billion from EUR 13.8 billion in June. The surplus was forecast to rise to EUR 15.5 billion.
Exports fell 0.2 percent from June after declining 0.3 percent. Meanwhile, growth in imports accelerated to 0.9 percent from 0.6 percent.
Meanwhile, on an unadjusted basis, the trade surplus increased to EUR 21.2 billion from EUR 16.7 billion in June. Exports and imports grew 3 percent and 1 percent, respectively from the previous year.
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OECD Trims Growth Outlook For Developed Nations
The Organization for Economic Cooperation and Development lowered its growth outlook for major developed nations and urged the European Central Bank to take further steps to boost demand.
In its interim economic assessment, the OECD said a moderate expansion is underway in most major advanced and emerging economies, but growth remains weak in the euro area.
The OECD projected 0.8 percent growth this year in euro area, down from the 1.2 percent expansion estimated in May. For 2015, growth is estimated at 1.1 percent.
The Paris-based lender recommended more monetary support for the euro area. Recent actions by the ECB are welcome, but further measures, including quantitative easing, are warranted, it said.
The U.S. economy is forecast to grow 2.1 percent this year instead of 2.6 percent and 3.1 percent in 2015 versus prior estimate of 3.5 percent.
Japan is projected to grow by 0.9 percent in 2014 and 1.1 percent in 2015. The U.K. GDP is projected to grow 3.1 percent in 2014 and 2.8 percent next year.
"The global economy is expanding unevenly, and at only a moderate rate," OECD Deputy Secretary-General and Acting Chief Economist Rintaro Tamaki said. "Trade growth therefore remains sluggish and labor market conditions in the main advanced economies are improving only gradually, with far too many people still unable to find good jobs worldwide."
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EURUSD pair fell during most of yesterday session, but bounced from the 10 day moving average closing above it. Because of this, the market is going to try to test the 1.30 level, an area that is significantly resistant. A sustained break above the 1.30 significant level, will push the pair to the 1.32 region, and possibly as high as 1.3250 as there is a gap there. Ultimately, a break of the last week consolidation between 1.2979 and 1.2859 should be tomorrow (Wednesday).