Eur/usd - page 172
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EUR/USD weekly outlook: October 13 - 17
The euro declined against the dollar on Friday amid concerns the European economy is floundering and may require fresh stimulus measures from the European Central Bank.
EUR/USD hit 1.2790 on Thursday, the pair’s highest level since September 24, before subsequently consolidating at 1.2629 by close of trade on Friday, down 0.48% for the day but still 0.91% higher for the week.
The pair is likely to find support at 1.2582, the low from October 6, and resistance at 1.2790, the high from October 9.
Market sentiment was hit by fears that Germany, the euro zone’s largest economy is being dragged into a recession after recent data indicated unexpected weakness in manufacturing and exports.
Data released on Thursday showed that German exports fell 5.8% in August, and this followed weak industrial output figures on Tuesday.
Earlier in the week, the International Monetary Fund cut its forecasts for global growth in 2014 and 2015 and warned that global growth may never reach its pre-crisis levels ever again.
The fund revised down its growth forecasts for the euro area’s three largest economies Germany, France and Italy.
Steep declines in commodity-price declines also fuelled fears that the global economy is slowing. Brent crude oil prices fell to their lowest level for nearly four years on Friday.
The dollar weakened after the minutes of the Federal Reserve’s September meeting released Wednesday showed that some officials were concerned over a slowdown in global growth and the impact of the stronger dollar on the U.S. inflation outlook.
"Some participants expressed concern that the persistent shortfall of economic growth and inflation in the euro area could lead to a further appreciation of the dollar and have adverse effects on the U.S. external sector," the minutes said.
The minutes prompted investors to trim back expectations for an earlier-than-expected hike in U.S. interest rates.
On Friday, Fed Vice Chairman Stanley Fischer said weaker-than-expected global growth could prompt it to slow the pace of eventual interest rate hikes.
The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, ended the week down 1% at 85.92. The move ended a 12-week rally that saw the index gain more than 8% since early July.
In the week ahead, investors will be awaiting U.S. data on retail sales and industrial production for fresh indications on the strength of the economic recovery. Tuesday’s ZEW report on German economic sentiment will also be closely watched.
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EURUSD fell during the course of the day on Friday, continuing the bearish pressure that we have seen for quite some time. The market tested the 1.26 level and found enough support. However, the market technically is bearish overall but is holding above the 10-day moving average so expect short term bullish correction to continue.
Germany’s Wholesale Price Index 0.1% vs. 0.1% forecast
Germany’s wholesale price index rose last month, official data showed on Monday.
In a report, Destatis said that Germany’s Wholesale Price Index rose to 0.1%, from -0.2% in the preceding month.
Analysts had expected Germany’s Wholesale Price Index to rise 0.1% last month.
Draghi-Weidmann Fight Intensifies as ECB Debates Action
Mario Draghi and Jens Weidmann are clashing anew over how much more stimulus the ailing euro-area economy needs from the European Central Bank.
As Europe’s woes again proved the chief concern at weekend meetings of the International Monetary Fund in Washington, President Draghi repeated he’s ready to expand the ECB’s balance sheet by as much as 1 trillion euros ($1.3 trillion) to beat back the threat of deflation. Bundesbank head Weidmann responded by saying that a target value isn’t set in stone.
The differences at the heart of policy making risk leaving the ECB hamstrung as the region’s economy stalls and inflation fades further from the central bank’s target of just below 2 percent. History suggests Draghi will ultimately prevail over his German colleague.
“There’s an enormous conflict within the Governing Council on what the ECB should do,” said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt. “Clearly, it’s Draghi against Weidmann once again. In the end, Draghi will get his way and we will see quantitative easing next year.”
The ECB is swelling its balance sheet as it seeks to revive inflation of 0.3 percent, the lowest in almost five years. By buying private-sector assets, as it plans to do from this month, or continuing to accept collateral from banks in return for cheap loans, it is pushing liquidity into the economy. Still unresolved is if it will ultimately buy sovereign debt, a taboo subject in Germany where politicians worry it amounts to financing governments and removing pressure on them to act.
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EUR / USD rebounded from near the line de1.2600 (S1) during the Asian session, revealing a higher minimum.
The only notable trend within the G10 was the strengthening of the yen.
This is due to the decline of stock markets worldwide.
The stock markets of Europe, USA and Japan ended the week leaving worrying signs about their climbs.
price is still under the potential resistance 1.2720 with a potential head and shoulders on the 4 hour chart I am going short sell
EUR/USD: Trading The German ZEW Economic Sentiment
German ZEW Economic Sentiment is based on a monthly survey of institutional investors and analysts and their views of the German economy. A reading that is higher than the market forecast is bullish for the euro.
Here are all the details, and 5 possible outcomes for EUR/USD.
Published on Tuesday at 9:00 GMT.
Indicator Background
German ZEW Economic Sentiment surveys financial experts for their assessment of the direction of the German economy in the next six months, based on economic data including inflation, exchange rates and the stock market. This makes the index an important indicator of the medium-term future of the German economy.
The indicator has been on a sharp slide throughout 2014 and dropped to 6.9 points in the previous reading. However, this was enough to beat the estimate of 5.2 points. The markets are expecting a September reading of just 0.2 points. A reading below the zero level would point to pessimism and could push hard on the euro.
Sentiments and levels
Although ECB head Mario Draghi took a hands-off approach in the last rate decision, he doesn’t appear keen on letting the euro rise. In addition, the region’s locomotive and great hope, Germany, is already feared to have entered a recession. In the US, the FOMC minutes were unexpectedly dovish and hurt the dollar, but since then, the all important labor data in the US has only improved as seen in the excellent NFP, the best JOLTS since 2001 and the lowest 4 week moving average in jobless claims since 2006. The dollar uptrend is intact. So, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.28, 1.2750, 1.27, 1.2660, 1.2570 and 1.25.
5 Scenarios
source
EURUSD has been consolidating sideways after a break above its 10-day moving average last week. This upward movement has created a short-term bullish environment and a long-term consolidative outlook above 1.2500. On the 4h charts there is a bullish flag pattern under 1.2700 and a break above that level should accelerate gains toward 1.28.
EUR/USD moved higher on Monday, to the 1.2760//90.
Many traders were expecting that and the daily momentum studies point towards further upside.
• Support: 1.2600 (S1) - 1.2500 (S2) - 1.2465 (S3)
• Resistance: 1.2790 (R1) - 1.2900 (R2) - 1.3000 (R3)
German ZEW Economic Sentiment goes negative
It gets worse in Germany: the ZEW economic sentiment fell to -3.6 points. The negative number reflects pessimism.
The German ZEW Economic Sentiment was expected to slide to 0.2 points in October from 6.9 in September, indicating very minimal optimism and continuing the slide seen since early in the year. The Current Situation component was predicted to slide to 18 points. the all European number was expected to be halved to 7.1 points. At the same time, euro-zone industrial production carried expectations for a drop of 1.6% in August m/m, and 0.9% y/y.
EUR/USD traded just under 1.27 towards the release, sliding from the highs after weak inflation data from France and Spain.