Currency Analyst since 2010

EUR/USD: forecast for October 12-18

By Elizabeth Belugina

The past week turned out to be positive for the euro. Despite the weak production data from Germany and the dovish tone of September ECB meeting minutes, the euro held its ground and managed to rise above the August-September resistance line and test levels above 1.13.

US dollar didn’t have much strength over the euro, as the data from the United States weren’t very bright either, plus the Federal Reserve’s September meeting minutes indicated that American central bank is concerned about the weak global economic growth and is not in a hurry to raise the interest rate. Weak NFP released a weak earlier also contributed to the lower expectations of the Fed’s rate hike.

Next week there won’t be a lot of news from the euro area. Pay attention to Germany’s ZEW economic sentiment on Tuesday and the region’s final September inflation figures on Friday. US economic calendar is more filled with important events like the publication of retail sales data on Wednesday and inflation figures on Friday.

In addition, beware of Chinese trade balance on Tuesday and inflation on Wednesday: for now the single currency keeps strengthening on lower figures of China.

As a result, the balance of risks for EUR/USD in the near-term is to the upside. Initial resistance is at 1.1350 (the top of the short-term rising channel) and a fix above this level will open the way to 1.1400 and 1.1460 (September high/resistance since May 2014). The area of 1.1460/1.1500 will likely limit the upside of EUR/USD ahead of the ECB’s meeting on October 22 as the European Central Bank doesn’t want higher euro and can make some announcements about the additional quantitative easing (QE) which will hit the single currency. Support is at 1.1250 and 1.1170. 


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