EUR/USD Forecast June 26-30, 2017

EUR/USD was under pressure as the dollar enjoyed some gains. Has the pair turned down? The last week of June features an important German survey and key inflation data. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.

According to some reports, Draghi will wait for longer before revealing plans about QE tapering. If correct, we will be kept in the dark until after the German elections in September. This hurt the euro. In the US, some Fed officials echoed the hawkish sentiment of the recent rate decision, keeping the dollar bid.

Updates:

EUR/USD daily chart with support and resistance lines on it. 

(Click on image to enlarge)

1. German Ifo Business Climate: Monday, 8:00. Germany’s No. 1 Think-tank has a significant influence. In the past four months, IFO’s readings beat expectations, reaching 114.6 points in May. While the parallel figure from ZEW fell short, we can expect an upbeat result from IFO.
2. French CPI: Tuesday, 6:45. The second-largest economy begins the series of preliminary inflation reads before the all-European number on Friday. Back in May, the final read of French CPI eventually came out flat on a monthly basis, falling short of expectations.
3. French Consumer Spending: Wednesday, 6:45. French consumers increased their spending by 0.5% in April. The rise was lower than expected. We now get the data for May.
4. Monetary data: Wednesday, 8:00. The M3 Money Supply advanced by 4.9% on a yearly basis in April, around the previous levels. Private loans remained at a growth rate of 2.4%. The ECB’s monetary stimulus helps in accelerating growth in these figures.
5. Italian CPI: Wednesday, 9:00. The third-largest economy in the eurozone saw prices slipping by 0.2% in the month of May, as expected.
6. German GfK Consumer Climate: Thursday, 6:00. Consumer confidence reached a post-crisis high of 10.4 points in May, reflecting the strength of the German economy as well as optimism for the future. Can it continue rising?
7. Spanish CPI: Thursday, 7:00. The fourth-largest economy had already seen inflation at 3% y/y but this has cooled down. CPI dropped to 1.9% y/y in May.
8. German CPI: Thursday: German states release the data throughout the morning, and the all-German number is at 12:00. As the largest economy in the euro-zone, changes in German prices have the strongest weight in the all-European data. Month over month, CPI dropped by 0.2% in May.
9. German Unemployment Change: Friday, 7:55. Germany enjoys a growing economy and falling unemployment. The number of the unemployed fell by 9K in April. The data for May is expected to show a similar drop.
10. CPI: Friday, 9:00. The culmination of all the euro-zone figures come on Friday when we will also get core inflation, which disappointed in May by falling to 0.9%. Headline inflation stood at 1.4%.

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar was on the back foot, slipping towards the 1.11 level mentioned last week.

Technical lines from top to bottom:

1.1420 was a high back in the summer of 2016. 1.1360 capped the pair in September.

1.13 is the top line seen in November before the collapse. 1.1230 capped the pair in June.

1.1160 was a low point in May, where the pair retreated to after hitting new highs. The round number of 1.11 was a siwng low in late May.

1.1025 was the intial top after the pair breached 1.10 and now works as support. 1.0950 is close by, and the most recent 2017 high.

The swing high of 1.0870 is the swing high in December and remains fierce resistance. 1.0820 was the post-French elections low.

1.0775 capped the pair in January and remains of importance. 1.0720 was also high in January.

I turn from neutral to bullish on EUR/USD

The period of consolidation may have reached an end. The hawkishness of the Fed is already priced in and reality could bite. In the euro-zone, the economy looks good, politics look good and Draghi will eventually have to taper. He cannot delay things forever.