EUR Technical Analysis

The European Commission’s proposed €750 billion package to help the EU economy recover from the coronavirus pandemic will likely be the center of attention this coming week.

It is expected to be discussed at Thursday’s Eurogroup meeting and hopes of an accord should keep EUR/USD on an upward trajectory even though the plan requires the agreement of all 27 EU member states, which is unlikely for several more weeks.

For now, EUR is reacting positively to the latest stimulus moves, from the ECB and Germany as well as the European Commission, and will likely continue to do so.

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There had been hopes that a solid economic recovery was on the way but that now seems in doubt, and the chances are that investors will again opt for safe havens like the US Dollar and the Japanese Yen rather than the Euro, the British Pound or the Australian Dollar.

This has already begun to take its toll on EUR/USD, which is now well down from the high above 1.14 reached earlier this month, and further losses from here would be no surprise.

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The agreements by EU leaders on a budget and a recovery fund have given EUR/USD a boost and prepared the ground for a further advance that could take the pair back to its autumn 2018 highs. However, traders should watch out for a possible retracement first as the pair is now technically overbought.

Having broken above the 1.15 level, EUR/USD is well placed to challenge the 1.1621 high reached in October 2018. However, a pullback is possible first after the pair’s recent strong gains.

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Fed Delivers as Expected, USD Selling Exacerbated by Month-End Flows. Stretched Euro Positioning Reduces the Appeal in the Short Term.

EUR/USD holding patten as markets await September breakout. US Dollar selling the dominant theme.

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The longer-term EUR/USD outlook will hinge on Thursday’s ECB guidance; any hint of a further easing of Eurozone monetary policy would weaken it, but that is far from guaranteed.

The statement Thursday at the end of the next meeting of the European Central Bank’s Governing Council, and the subsequent comments by ECB President Christine Lagarde at her news conference, will be critical in determining the future direction of the Euro.

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After the recent strength of EUR/USD, a period of consolidation is likely ahead of two critical meetings: of the European Central Bank and the European Council.

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EUR/USD has dropped sharply over the last few days and may well fall further. However, it is also possible that the bad news is now priced in to the exchange rate and that further weakness will be ...

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ECB policymakers were out in force last week, saying they were watching Eurozone government bond yields, but yields rose anyway, and that’s positive for EUR/USD and the Euro crosses.

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The Euro eyes Eurozone GDP, inflation and PMI data next week. However, still-dovish ECB commentary from top officials may dampen the impact of better-than-expected outcomes on EUR/USD.

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Last week was all about waiting for US inflation data and the ECB; the week ahead will be spent hoping for Federal Reserve guidance on US monetary policy – and EUR/USD is unlikely to move far eithe...

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