Currency Analyst since 2010

EUR/USD: forecast for September 7-13

By Elizaveta Belugina


During the past week, EUR/USD didn’t renew high. On the contrary, most time the bias was negative because of the expectations of the dovish European Central Bank. The ECB’s didn’t disappoint the bears. The regulator left monetary policy unchanged, but warned about the negative risks coming from emerging markets and lowered the euro area’s growth and inflation forecasts. President Mario Draghi said that currency union might slip into deflation in the coming months.

It now looks very likely that the ECB’s current quantitative easing program (QE) will last longer than September 2016. The central bank made some technical adjustments to QE, which will allow it to be more flexible and buy as much bonds as necessary. Overall, we can say that the ECB is dovish, but not aggressively so.

The euro area’s economic calendar for the next week is not very full. There will be industrial production figures from Germany and France, the regions’ revised GDP and the informal meeting of the European finance ministers. There may be some headlines ahead of the Greek election due on September 20 as for now no political party gets the majority in parliament that creates political risks.     

Still, it may be a relatively quiet week, which precedes the Federal Reserve’s meeting and elections in Greece. If we look at the American side of the things, we may see that mixed labor market data didn’t bring any clarity about what to expect from the Fed this month. So, no clear trends should come from here.

Note, however, that next week China can once again draw the market’s attention: the nation will release trade balance on Tuesday and inflation on Thursday. Don’t forget that lower-than-expected figures may spike demand for the euro as a safe haven.

Technical picture. Support is at 1.0900. Resistance is at 1.1280, 1.1436 (June 18 high) and 1.1467 (May 15 high). The euro is vulnerable for more declines against Japanese yen. 

Chart. Daily EUR/USD

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