Euro Outlook: EUR/USD Forecast Remains Positive After 6 Weeks of Gains

euro

TECHNICAL EURO OUTLOOK – BULLISH

  • After making a strong climb in mid-May, the EUR/USD likely to falter in the future.
  • Nevertheless, with the worsening US economy, and the November election approaching, it’s difficult to find any reason why the EUR/USD advance must end soon.
  • Agreements by the Eurozone leaders on the recovery fund and budget gives the EUR/USD a great boost. It also readied the ground for more advances that might take this pair back to 2018’s highs.
  • Nevertheless, traders must watch out for the potential retracement since the pair is now fundamentally oversold.

EURO PRICE FORECAST REMAIN ROSY

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As shown in the following chart, the EUR/USD has made great headway over the past six weeks and for 9 of the past eleven weeks. After such an uptrend, there should be a consolidation period or retracement; the problem is in the identification of the catalyst.

The EUR/USD is currently at a higher level that was seen from May to the end of September 2018, with the previous weeks’ ominous GDP data for the 2nd quarter and the US President’s sentiments about delaying elections. This added more reasons for the weakening US Dollar. As a result, the main question that needs to be asked after such a retracement is how high the EUR/USD might go.

The EUR/USD has already received a powerful boost by the agreement of EU leaders on the recovery fund and long-term budget to help Europe fully recover from the coronavirus crisis. As indicated in our previous post, the Euro broke over 1.15 and can without a doubt challenge the 1.1621 high it had reached back on 16th October 2018.

However, it’s also important to note that the 14-day RSI still holds steady above 70, presenting an oversold market for a 3rd consecutive time in 2020. This means there is a high likelihood of a retracement, perhaps incase the US Dollar recent weakness is reversed.

The answer to the question is the zone about 1.23, where the USD traded from early January to April 2018. While this might be quite a long time, it is still a worthwhile target later this year, maybe after the common august break.

A closer look into next week, there is less Eurozone data to shift markets with only the final services and manufacturing PMI’s for the zone in July due on Wednesday and Monday respectively. So, it will most likely be the US Dollar side of the equation that propels the EUR/USD with Friday’s recent non-farm payroll data an important factor on the week’s economic statistics.

WEEK AHEAD: UNEMPLOYMENT, INFLATION, IFO, AND GDP

Turning into next week’s economic data, there are some crucial statistics that the euro traders should carefully watch. The Eurozone, France, and Germany as a whole are publishing the 2nd quarter “flash” GDP data and ought to be significantly upbeat with EUR/USD RSI Bullish Trend Before The US Jobless Report.

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