Outlook for the Euro: More Weakness Ahead, Ukraine Concerns Loom Over EUR/USD and EUR/GBP

"The Ukrainian situation continues to loom over the EUR, and there has been a tendency for the tension to increase at the end of the week in the last few weeks, so it is hard to see a strong EUR rally," say Lloyds Bank Research in a currency note to clients.

At the weekend the following FX levels are seen:  

• The euro to pound sterling exchange rate (GBP/EUR) is @ 0.7912.
• The euro to US dollar exchange rate (EUR/USD) is @ 1.3132.
• The euro to Canadian dollar exchange rate (EUR/CAD) is @ 1.4300.

PS: All the above are spot market quotes, your bank will affix a discretionary spread to the figures. In order to get as close to the market rate we suggest consulting an independent FX provider, the delivery of up to 5% more currency is possible in many instances.

Euro Dollar Rate Outlook: More Downside Expected

While the crisis in Ukraine continues to undermine the shared currency the positivity out of the United States stands as a sharp contrast.

The USD got more good news yesterday as second release for US 2Q GDP yesterday saw an upward revision to 4.2% from 4.0%.

Combined with the incoming data H2 economic recovery looks to be strong and weak Q1 read seems to be nothing more than weather driven distortion.

"With upside surprises in confidence surveys and housing markets accelerations even stalled wage growth look less like to pull-down the economic escape velocity. The market improvement and corresponding Fed policy path seems to be a significant difference to Europe's worrying signals," says a note from Swissquote Research.

The Eurozone has this week produced a string of worrying economic data including services, industrial and economic confidence surveys.

"In addition escalations in tension between Russia and Ukraine will only further damage growth in Europe. There is a high probably that sanctions on Russia will push Europe into a recession," say Swissquote in reference to the deteriorating picture that will certainly undermine the euro exchange rate complex moving forward.

Technical Outlook Bearish for Euro Dollar

The technical structure for the euro dollar rate is negative as long as prices remain below the hourly resistance at 1.3297.

Luc Luyet at Swissquote says:

"An hourly support lies at 1.3153, while a key support stands at 1.3105 (06/09/2013 low). In the longer term, EUR/USD is in a succession of lower highs and lower lows since May 2014.

"A long-term decline towards the strong support area between 1.2755 (09/07/2013 low) and 1.2662 (13/11/2012 low) is favoured. However, in the shorter term, monitor the key support at 1.3105 (06/09/2013 low) given the general oversold conditions. A key resistance lies at 1.3444 (28/07/2014 high)."

Technical Outlook for the Euro Pound Exchange Rate

Turning to the euro's chances against the pound we see weakness in the headlights.

According to Luyet:

"EUR/GBP continues to weaken after its successful test of the key resistance at 0.8034. The break of the rising trendline favours further weakness towards the recent low at 0.7874. A first support lies at 0.7916. An hourly resistance can now be found at 0.7970 (20/08/2014 low).

"In the longer term, the break of the key support area between 0.8082 (01/01/2013 low) and 0.8065 (05/06/2014 low) opens the way for a full retracement of the rise that started at 0.7755 (23/07/2012 low). Another strong support stands at 0.7694 (20/10/2008 low).

"A break of the resistance at 0.8034 (25/06/2014 high) is needed to suggest some exhaustion in the medium-term selling pressures."