EUR/USD Forecast June 8-12
EUR/USD managed to shoot higher and crash back down in a very exciting week with multiple themes at play Industrial output data and other figures will accompany echoes from the ECB. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
Euro-zone data was relatively upbeat, with better service PMIs, solid retail sales and a lower unemployment rate. In the ECB press conference Draghi tried not to rock the boat. With no big change in forecasts, no front loading and no worries about volatility, the euro reacted positively and rallied higher. In the US, data was not convincing enough and that also supported the rise of the pair. Yet as the Greek crisis escalated and especially as the US enjoyed an excellent gain in jobs that sent the pair significantly lower.
* All times are GMT
EUR/USD weekly outlook: June 8 - 12
The euro dropped more than 1% against the dollar on Friday after a better-than-expected U.S. nonfarm payrolls report for May bolstered expectations that the Federal Reserve will start raising interest rates later this year.
The Labor Department reported that the U.S. economy added 280,000 jobs in May, ahead of economists forecast for 220,000. The unemployment rate ticked up to 5.5% from 5.4 in the previous month.
April’s payrolls report was revised to show that 221,000 jobs were created.
Hourly earnings increased 0.3% in May, after a 0.2% increase in April.
The upbeat data, particularly the pick-up in wage growth underlined the view that the economy is on track to rebound after a weak first quarter and bolstered expectations that the Federal Reserve could start to hike interest rates at its September policy meeting.
The dollar rallied against the other major currencies following the release of the data.
EUR/USD fell to lows of 1.1050 before pulling back to 1.1113 in late trade, still down 1.11% for the day.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.93% to 96.38 late Friday.
The single currency had jumped to one-month highs against the dollar on Thursday boosted by a rally in bund yields after European Central Bank President Mario Draghi said that investors should get used to higher debt market volatility.
Speaking after the ECB voted to keep interest rates on hold at a record low on Wednesday Mario Draghi said markets should get used to periods of higher volatility in European bond markets, which he said won’t affect monetary policy decisions.
The ECB also revised up its inflation forecast for this year and said it saw no reason add more monetary stimulus following the recent rally in European bond yields.
In the week ahead, investors will be focusing on revised data on first quarter growth from the euro zone, while reports on euro zone industrial production will also be closely watched.
In the U.S., Thursdays retail sales report and Fridays report on consumer sentiment will be scrutinized for signs that the world’s largest economy is gaining momentum in the current quarter.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Wednesday as there are no major economic data releases scheduled.
Bank of France business sentiment index May 99 vs 98 exp
June 2015 Eurozone sentix 17.1 vs 18.7 exp
Sentix index for the Eurozone
EUR recorded a second consequential reduction against the dollar on Friday. The session started at a price of 1.1237 and in the hours around noon it reached the highest level for the day at 1.1279. Later the price went down sharply, reaching levels around 1.1051. At the end of the day the euro finished at 1.1110 and if the downward trend continues, we can expect the first test of support at 1.0815.
EUR/USD: Euro Above $1.12 on No News, Erases NFP Losses
The euro rose sharply and broke above the $1.12 level during the US session on Monday, however, there was no clear fundamental driver behind this move.
The main currency pair in the world added around 100 pips on Monday and was seen sharply higher on the day, climbing above the $1.12 mark. The dollar came under sudden selling pressure on Monday, weakening against most of the major peers.
Earlier on Friday, US non-farm payrolls, the most influential labor release of the month, revealed employers added 280,000 new jobs to the economy in May, after 221,000 a month ago, while the market expected the figure to print 226,000. The euro dropped nearly 200 pips, but managed to erase nearly all the losses on Monday.
US figures over the week will include jobless claims, retail sales and consumer confidence numbers. The figures will be closely watched as the next Federal Reserve meeting looms and a rate hike at this meeting is still in play.
According to CFTC and Rabobank research, having fallen for six consecutive weeks, the latest snapshot shows an increase in USD longs. Following the better-than-expected May payrolls report, there is reason to suspect that longs could increase again this week. The level of EUR shorts rose for the second consecutive week. Not only has the ECB indicated that it will front load some of its summer asset purchases, but concerns that Greece could be on course for default increased.
"There is a decided mixed tone to the markets today as the tensions between firming US economic data (underscored by the surprisingly strong May payrolls report) and continued uncertainty surrounding negotiations between Greece and its group of creditors have pushed core DM rates in differing direction," analysts at TD Securities wrote in a research note on Monday.
Earlier in the session, German industrial production for April picked up and printed 0.9% month-on-month, well above last month's -0.4%, while the yearly change also came out above expectations at 1.4%, improving from the 0.2% in March.
Moreover, the German trade surplus softened from €23.1 billion in March to €22.1 billion in April.
A surprisingly strident speech from Greek Prime Minister Alexis Tsipras to the Greek parliament late on Friday, in which he accused EU creditors of "absurd" behavior with respect to the recent new proposals put forward with the help of the EU Commission on the part of the institutions, has once again highlighted the extent of the chasm between the two sides.
EUR/USD gained all the losses of thursday and friday and now price again is testing 1.1300
EUR/USD: Euro Jumps, Erases NFP-Driven Losses
Eurozone Q1 GDP qq confirmed at +0.4%
Published at Reuters 30 minutes before the official data release
I'm almost sure this isn't the end of the down movement in the eurusd.