EUR/USD Forecast May 17-21 – Euro steady, Fed insists no change in policy

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The euro rally petered out, as EUR/USD was down barely final week. There are three releases within the upcoming week, together with eurozone inflation. Here is an outlook on the highlights and an up to date technical evaluation for EUR/USD.

The eurozone Sentix Investor Confidence rose to 21.0 in Might, up from 13.1 factors. Traders are exhibiting elevated optimism because the eurozone vaccine rollout gathers steam. The ZEW Financial Sentiment index for May confirmed stronger optimism, rising from 66.3 to 84.0. Germany’s ZEW learn additionally accelerated, from 70.7 to 84.4 factors. German inflation got here in at 0.7%, confirming the preliminary estimate.

Within the US, April inflation surged and was increased than anticipated. Headline CPI (YoY) climbed 4.2%, up from 2.6% beforehand. PPI additionally climbed sharply, with a acquire of 6.2%, up from 4.2% beforehand. Regardless of the surge in inflation, Fed members reiterated that there are not any plans to taper the large stimulus program.

Retail Gross sales for March (MoM) dissatisfied. The headline studying slowed to 0.0%, down from 9.8% within the earlier launch and shy of the estimate of 1.0%. Core Retail Gross sales contracted by 0.8%, down sharply from 8.4% and shy of the forecast of +0.5%.

EUR/USD day by day chart with help and resistance traces on it. Click on to enlarge:

  1. GDP: Tuesday, 9:00. The eurozone financial system contracted by 0.6% in This autumn, its third decline in 4 quarters. One other decline of 0.6% is predicted within the first quarter.
  2. Inflation Report: Wednesday, 9:00. We’re seeing growing inflationary pressures within the eurozone, which may drive the ECB to reevaluate its ultra-accommodative financial coverage. Eurozone headline CPI has been rising and is predicted to succeed in 1.6%, up from 1.3%. Nevertheless, core CPI is forecast to tick decrease to 0.8%, down from 0.9%.
  3. PMIs: Friday, 7:15 in France, 7:30 in Germany, and eight:00 for the entire eurozone. Manufacturing continues to point out sturdy progress. Germany is main the best way, and the estimate for the April Manufacturing PMI stands at 66.0. The estimate for the eurozone stands at 62.0 and France at 58.6 factors. The companies sector has been lagging behind, as a result of ongoing lockdowns in Western Europe. however are exhibiting slight enlargement. The estimate is 52.0 for Germany, 52.5 for the eurozone and 53.0 for France. The 50-level separates contraction from enlargement.

Technical traces from prime to backside:

1.2412 is a essential month-to-month resistance line.

1.2292 is subsequent.

1.2108 (talked about last week) is the primary help degree.

1.2042 switched to help in early Might because the euro posted sturdy positive factors.

1.1922 has held in help since mid-April.

1.1857 is the ultimate line for now.

I’m bullish on EUR/USD

The financial image is enhancing within the eurozone, because the vaccine rollout accelerates. With the Fed insisting that it’ll not alter its dovish coverage, the greenback shouldn’t be particularly engaging.

Additional studying:

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