Euro v US Dollar: Technical Forecast, Data and Events to Watch in the Week Ahead
Our studies suggest EUR/USD will continue to trade with a positive bias, despite recent weakness seen in the exchange rate.
As such, there is still no change to our forecast for the pair to reach 1.1390, as per our June 11 weekly report and the June 15 update.
The pair remains in a short-term uptrend and will probably eventually reach the 1.1390-1.1400 resistance zone, except it has lost ground over the last week and is now pressing on a trendline, which if it breaches would open the floodgates lower.
In the absence of a breakdown, however, we stick with our bullish forecast for a move up to 1.1390, confirmed by a rise above the 1.1300 highs.
Momentum, as measured by MACD is bearish and if the pair manages to break below the trendline, confirmed by a move below 1.1100, it will probably reach the next target at the 1.1000 psychological level.
Data and Events for the Euro
It is a light week for Eurozone data with the European Central Bank (ECB) revealing their current thinking on the economy within their latest monthly Economic Bulletin released on Thursday at 09.00 BST.
Then Friday see’s the release of preliminary Purchasing Manager data (PMI) on manufacturing and service sector activity for May at 09.00 BST, amid expectations for a modest decline.
Ahead of Euro zone PMI's, France and Germany will release their own PMI reports at 08.00 BST and 08.30 BST respectively.
Data and events for the US Dollar
Never wiser piece of investment advice was made than “Housing Leads the Economy’.
Which is why it is all the more worrying that recent US housing data has been decidedly on the weak side.
It also means this week’s data from the National Association of Realtors will be closely watched.
On Wednesday Existing Home Sales for May will be released at 15.00 BST amid forecasts of a decline of 0.7% to 5.55 million, following a slump of 2.3% a month earlier.
On Friday, New Home Sales for May is released at 15.00. The data is expected to show an increase of 5.5% to 600,000, following a drop of 11.4% in April.
The other highlight for Dollar-traders is Federal Reserve speakers, several of whom will be making appearances in the week ahead and commenting on the outlook for future monetary policy.
Monday sees New York Fed President William Dudley and Chicago Fed President Charles Evans make public appearances.
On Tuesday, Fed Vice Chair Stanley Fischer, Boston Fed President Eric Rosengren and Dallas Fed President Rob Kaplan are scheduled to deliver comments.
Fed Governor Jay Powell is due to speak before the Senate Banking Committee on Thursday.
Finally, Friday sees St. Louis Fed President James Bullard, Cleveland Fed President Loretta Mester and Fed Governor Powell make public remarks.
Despite the Fed's relatively hawkish message at the last Fed meeting when Chair Janet Yellen highlighted the strong labour market, investors remained doubtful over the Fed's ability to raise rates as much as it would like before the end of the year due to a recent run of disappointing U.S. economic data.
Futures traders are pricing in less than a 15% chance of a hike at the Fed's September meeting according to Fed’s Funds Futures, whilst odds of more expected December increase was seen at about 35%.
