EURUSD Forecast: FED is not enough for Euro

Warning: This forecast is the second part of a shortened version of the Global Report prepared for our investors originally published on our website. Intraday traders may not get any benefit of this article.

The German manufacturing index fell to 44.7 a 79-month low, while the services one printed 54.9 the lowest in two months. For the whole Union, the Manufacturing PMI resulted at 47.7, a 71-month low, while for the services area, the index resulted at 51.3, its lowest in 2-month

Eurozone’s growth in labour costs weakened in 2018Q4 and is expected to continue to fall. Eurostat published its report on labour costs in 2018Q4 yesterday. It showed that the rise in total labour costs slowed to 2.3% yoy in 2018Q4, down from 2.5% in 2018Q3. Wage growth stabilised at 2.3%, while the rise in non-wage labour costs slowed to 2.4% from 2.9%. The slowdown in non-wage costs reflects changes in government policy, such as cuts in social contributions and labour taxes paid by employers.

Another damage is coming from the US President. The possibility of European auto tariffs – President Trump said on Wednesday that the EU has been very tough on the US for many years and “we’re looking at something to combat at

There are several macroeconomic indicators and political turmoil ( Italy, Brexit, France ) which would keep EURO under selling pressure for a while. I would like to keep it short…

Simply saying: EURO is the weakest ring of the chain.

Our readers know we started to add short on DAX30, EURGBP. And we entered a long term EURJPY short trade. And we believe the most profitable one will be XAUEUR longer term. Anyways, the subject of this article is EURUSD only.


The dollar continues to gain strength against the Euro. – The trend started with the 2008 Crisis-

ECB’s QE and rate cut period – Started in 2014 – added weight on EURUSD. After the recovery from 1.03 – almost the parity – towards 1.27, the sell-off is triggered by FED’s rate hike cycles in 2018.

The bearish trend will remain until we see the pair breaks and makes daily closings above 1.22. So all the throwbacks towards 1.22 is just a selling opportunity.

However, we do not need to wait for 1.22.

On the smaller chart timeframes, the picture is quite clear.
Near Term: The bearish pressure will remain as long as the pair makes Daily Closing below 1.15500.

The upcoming week’s macroeconomic calendar will be quite busy, although the most relevant releases scheduled are US Q4 GDP and German March inflation on Thursday, and January US core PCE inflation on Friday. This last may have a limited effect on the usd, as it is a delayed release, and the latest Fed’s announcement has already set the central bank’s course for the upcoming months.

Simply: German 10-year bond yields turned negative for the first time since October 2016, causing EUR/USD to drop to an intraday low of 1.1288 and ended the week at 1.1299.
EURUSD fails to close above 1.13600. Euro cannot find buyers. While the Fed no longer plans to raise interest rates this year, the ECB won’t raise interest rates until the Fed makes another move. Another question: If FED goes to a rate cut, what will ECB do?

Technically and fundamentally, our target of 1.10600 is still logical. ( The wedge’s baseline )

We keep selling EURUSD. We will focus on 1.12200 support. The breakout of this support will send the price 1.10600.

When to buy EURUSD?

Answer: Closing above 1.13600 with target 1.14200, 1.14800 and 1.15200. Or buy at 1.10600 targeting 1.13600.