Currency Analyst since 2010

EUR/USD: outlook for October 10-14

During the week EUR/USD was trading in a very volatile fashion. The euro got a boost and managed to recover from lows on the speculation that the European Central Bank’s thinking about tapering its quantitative easing program. According to a report by Bloomberg, the regulator would start winding down its bond buying by 10 billion euro a month, ahead of the program’s currently scheduled end in March 2017. However, there was no official confirmation of this information, and earlier the ECB president Mario Draghi has consistently said monetary stimulus would be extended past March if necessary.

As for other news, German factory orders rose at the fastest pace in 5 months. Concerns about Deutsche Bank have declined, but the uncertainty still remains. Moreover, significant political uncertainty looms ahead, and despite good readings from Germany we see that the overall economy of the currency union is losing momentum.  

Next week don’t miss German trade balance and Sentix investor confidence on Monday and German and the euro area’s ZEW economic sentiment on Tuesday.

Technically EUR/USD failed to stick to the levels above 100-week MA (1.1210). However, the pair got support near 1.1100 (support line from November 2015). Next week we expect EUR/USD to stay in 1.1200/1.1100 range. Decline below 1.1100 will open the way down to 1.1040/00. 

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