FORECAST - EUR/USD - May 8^th -12^th, 2017

 

Euro/Dollar climbed up ahead of the French elections second round. Will it climb up even higher? GDP and other events from the euro zone are coming up apart from the elections. Here are some major events of this week and an a technical analysis for EUR/USD.

The most recent polls look good for centrist Macron, with above 60% support. This may help the euro. Economic data also gave a boost: GDP grew by 0.5% in Quarter 1, showing increased growth. PMIs were OK, pointing to further growth and retail sales were higher than expectations with 0.3%. In the US, the Fed left rates untouched and did not seem bothered about the latest slowdown. The Fed supported the dollar, but the euro had more support.

Here are the upcoming big events :

1.                    French elections round 2: Sunday, exit polls are at 18:00 GMT and the results will release by the market open. The result in the opinion polls was favorable to the centrist, diminishing the talk of wearing down in his popularity. If the polls are as accurate as they were in the first round, Macron is set for a huge victory. This will support markets about the forthcoming parliamentary elections, giving Macron a possible majority that will enable reforms. A victory with lower than 60% might cause worry, but still prevent Le Pen becoming president. If she becomes the winner against all odds, the euro is set to fall down against the USD. Le Pen desires France to leave the euro and euro may not exist without France.

2.                    German Factory Orders: Monday, 6:00. Germany is the industrial “backbone” of the zone. Factory orders raised by 3.4% back in February.

3.                    Sentix Investor Confidence: Monday, 8:30. This survey has advanced well in recent months, reaching 23.9 in the month of April, above expectations for the 4^th successive month.

4.                    German Industrial Production: Tuesday, 6:00. Like the factory orders, also industrial output has been climbed in Germany in February, growing 2.2%.

5.                    German Trade Balance: Tuesday, 6:00. Germany’s large trade surplus helps a stronger euro. After two months below the 20 billion mark, the surplus expanded again to 21 billion in February.

6.                    French CPI (final): Tuesday, 6:45. According to the preliminary read for April, prices increased by only 0.1% m/m, against the all-European movement. That will likely be confirmed now.

7.                    French Industrial Production: Tuesday, 6:45. Industrial output in the euro-zone’s second-largest economy fallen by 1.6% in February. We might see a bounce now.

8.                    French Trade Balance: Wednesday, 6:45. Opposing to Germany, France has a deficit in its trade balance. This shortage has widened to 6.6 billion in February.

9.                    ECB Economic Bulletin: Thursday, 8:00. Two weeks after Draghi was positive about growth but uncertain about inflation, we will get more data from the ECB, the data they used for making their estimations.

10.                EU Economic Forecasts: Thursday, 9:00. The European Commission releases its economic forecasts, three times a year for growth and other measures. Given the current firming of the economies, we can look forward to an upgrade of the forecasts this time.

11.                German GDP: Friday, 6:00. This is the first release of the German Gross Domestic Product for Q1 in 2017. By now, we had the all-European number, but any shocker from Germany can change that figure easily, as Germany is the largest economy. In Q4, Germany grew by only 0.4%, slightly below expectations.

12.                German CPI (final): Friday, 6:00. Prices remained same in April according to the flash data. This will likely be confirmed. The final German statistics added into the all-European statistics.

13.                French Non-Farm Payrolls: Friday, 9:00. This is a quarterly measure of employment. In quarter 4, we had a growth rate of 0.4%, encouraging given the previous, slower quarters. We now get the initial figure for Q1 2017.

14.                Industrial production: Friday, 9:00. Industrial output dropped by 0.3% across the euro-zone. Regardless of being released after the big countries will already have released their figures, the publication still moves markets.

 

EUR/USD Technical Analysis

EUR/USD began the week trading over support at 1.0870. The pair then made a move upwards, reaching new highs for 2017.

Technical lines from top to bottom:

1.1300 – Strong Resistance

1.1120 – Strong Resistance

1.1000 – Strong Resistance (psychological level)

1.0950 – weak Support

1.0870 – Strong Support

1.0820 – Strong Support

1.0775 – Strong Support

1.0720 – Strong Support

1.0660 – Strong Support

Uptrend channel stays unbroken

Euro/Dollar has had three considerable and rising lows in 2017: 1.0340 in the early of the year, 1.0490 in March and 1.0565 in April. Also on the topside, higher highs were emerged. If this remains, Euro will go up than down.

We remain bullish on Euro/Dollar