EUR/USD: forecast for Feb. 29 - Mar. 6
By Elizabeth Belugina
EUR/USD made a breakthrough below 1.0960 on Friday (trend line support from December and 50% Fibo). German retail sales increased, but import prices fell – a sign of deflation pressure. Flash inflation figures for February also came out much weaker than expected. Core inflation for February was only 0.7% compared with 1% in January. It means that investors will expect more action from the European Central Bank – weak price growth allows the regulator to ease policy.
The single currency will have to feel the pressure ahead of the ECB upcoming meeting next Thursday, March 10. Concerns about potential Brexit (Britain leaving the European Union) also affect the euro. This week the euro area’s economic calendar will be light. No changes in the weak region’s final PMIs due on Tuesday are expected. Pay more attention to the US statistics, especially PMIs on Tuesday and Thursday and NFP on Friday.
The pair closed the week below 55-week MA (1.1025). Technical picture has turned mildly bearish. The euro will likely slide to 1.0830 (61.8% Fibo) /1.0800. If the negative pressure strengthens, the next level to watch will be 1.0710. Resistance is at 1.1000 and 1.1050. The bulls have to push the price above the latter in order to return the lost powers.