EUR/USD Forecast August 3-7 – Euro’s Surge Continues

EUR/USD showed strong gains for a third successive week last week, as the pair briefly punched above the 1.19 level. There are six events in the upcoming week, including retail sales and PMIs. Here is an outlook at the highlights and an updated technical analysis for EUR/USD.

The German economic outlook improved for a third straight month, as Ifo Business Climate rose from 86.2 to 90.5 in July. However, other German data was soft. CPI fell by 0.5%, its second decline in three months. GDP in Q2 plunged 10.1%, worse than the estimate of -9.0%.

In the Eurozone, CPI rose to 0.4%, up from 0.3%, while the core figure improved to 1.2%, up from 0.8%. Eurozone GDP fell by 12.1% in Q2, after a decline of 3.8% beforehand.

In the US, it was not a great week. Durable goods data softened in June. The headline came in at 7.3%, down from 15.8%. The core reading fell from 4.0% to 3.3%. The Fed maintained the benchmark rate at zero and had a dovish attitude for the markets, as expected. Policymakers reiterated their commitment to “act as appropriate to support the economy", but did not announce any new policy measures.

The initial GDP read for Q2 was dismal. The economy contracted by 32.9%, close to the estimate of 34.5%. The week ended with UoM Consumer Sentiment falling to 72.5, down sharply from 78.1 beforehand.

EUR/USD daily chart with support and resistance lines on it. Click to enlarge:

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