EUR/USD Weekly Technical Forecast (SEP 27-Oct 1 2010)

EUR/USD Technical Analysis:

Last week Euro started its week above 1.30 level and struggled between 1.30-1.3110 level when it braked upside euro went up sharply and break past 3 months high at 1.3326 and closed on upside now euro is in bullish mode and targeting 1.3550 area which is 61.8 % of 1.4577-1.1875 if euro break that area so next target will be 1.3890 which is 61.8% of 1.5143-1.1875 overall bias is turn into bullish after break out of 1.3326 on downside 1.3430 becomes a support which was a strong resistance for euro and more lower 1.3320 is also a important area. on daily chart we can see clearly that we are heading to upside and our next target will be 1.3550 first and then 1.3700 which is also another major resistance for euro.



EUR/USD now ranges between 1.3430, which was a strong resistance line in February, and 1.3530 which was a line of support in the past, and now serves as minor resistance. if euro get success to break 1.3800 area which euro tried to break in the beginning of the year so we may see a new high of the year in coming days. according to channels on daily chart indicating upside movement until 1.3700.

According to Weekly Chart Euro has break Ascending channel to upside and giving indications to more upside pressure.



Employment, inflation and many other releases will shape the direction of the strengthening Euro in the upcoming week. Here’s an outlook for the European events, and an updated technical analysis for EUR/USD.

The Euro enjoyed a superb week, rising gradually and eventually breaking a significant barrier. The debt issues were put aside. Will this optimism continue this week? Let’s start:

1. Jean-Claude Trichet talks: Monday at 7:00 and at 13:00. The president of the ECB will first speak in a conference in Frankfurt about regulation, and will later talk in front of a committee of the European parliament – a more important event. Any reference to the economic situation, debt issues and especially the interest rate will rock the Euro during a long time, as the second appearance will probably be quite long.


2. M3 Money Supply: Monday, 8:00. After a few months of squeeze in the amount of money in circulation, the Euro zone enjoyed a surprising growth two months ago, another sign that inflation isn’t as tame beforehand. After a 0.2% in the past two months, a 0.4% rise is expected now, and will boost the Euro.


3. German GfK Consumer Climate: Tuesday, 6:00. After many months with a score under 4 points, this survey of 2000 German consumers jumped to 4.1 points last month, meaning that consumers are more confident to spend. A rise to 4.3 points is expected now.


4. German Prelim CPI: Tuesday. The different German states will release an initial estimation for the consumer price index. After a few months of rises, Europe’s largest economy is expected to show a dip of 0.2% in prices, probably a one time event. Any rise will boost the Euro.


5. French Consumer Spending: Tuesday, 6:45. Europe’s second largest economy didn’t release this important indicator last month, so we’ll have two releases now. The figure for July is expected to show a rise of 0.5%, while a drop is expected for August. If both figures offset each other, no significant effect will be seen.


6. German Unemployment Change: Thursday, 7:55. The locomotive of the Euro-zone enjoyed six straight months of drop in the number of unemployed people. A seventh month is expected to follow, with a drop of 20K, similar to last month’s 17K drop.


7. CPI Flash Estimate: Thursday, 9:00.  European prices have been on the rise and the zone is no longer in deflationary conditions, yet still lower than Britian – there’s no need for a rate hike. This time, the annualized number is expected to rise from 1.6% to 1.8% – something that can boost the Euro, raising the chance of a rate hike., which still seems far at the moment.


8. German Retail Sales: Friday, 6:00. The volume of sales has been quite volatile in recent months – with a jump of 3% followed by two months of drops. Last month’s 0.1% rise will probably be followed by a 0.5% rise this time.


9. Final Manufacturing PMI: Friday, 8:00. Purchasing managers became less optimistic, according to the initial release of this 600 strong survey. The score of 55.1 points will probably be confirmed now.


10. Unemployment Rate: Friday, 9:00. Employment is a weak spot in Europe and the release will probably be a reminder that the Euro-zone is still recovering slowly and unevenly. Since the beginning of the year, unemployment rate was at around 10%. It’s expected to remain at this level for another month, weakening the Euro.

Let’s review the events. All times are GMT.

I am bullish on EUR/USD.

The markets now focus on good European figures and disregards the debt issues. The Euro broke significant resistance levels and the influx of figures can push the Euro higher, at least during this week.

Recommended Weekly Trade: Buy Euro at 1.3350 with Stop loss of :1.3240 and target 1.3650