Analysis and Forecast EUR / USD - Weekly overview (16.11-20.11)

FX:EURUSD   Euro / U.S. Dollar
Last week was marked by a correction of the recent declines. The euro strengthened against the dollar only 0.36%. In the first part of last week, we recorded a new low of 1.0673. Then, as predicted has come to the fore demand side, which headed toward indicated my resistance around 1.0810. Maximum dropped out at the level 1.0829.

In the absence of data during the first session of last week, investors awaited Thursday's carefully Mario Draghi of the European Parliament and Friday's US data.
Mario Draghi in his statement noted that "the recovery in the euro area remains moderate" and "downside risks stemming from global growth and trade are clearly visible." The ECB president particularly drew attention to the weakening dynamics of inflation , due to lower energy prices. This in turn can mean a longer time to achieve the inflation target. Accordingly, Mario Draghi confirmed the readiness of the ECB to act using all available tools to stimulate the European economy.

In conclusion speech of Mario Draghi, we can assume that in December the ECB will proceed to action. At the moment, taking into account the extension of the QE program.

A few words more on Friday's US data which, in the context of recent robust readings from the US, were to be confirmation of the good mood around any series of interest rate hikes. Retail sales remained at 0.1%, but was worse than forecast, which assumed growth of 0.3%. Core retail sales also turned out to be worse with the forecast of 0.2% to 0.4%. Read PPI turned out to be below expectations (-0.4% against a forecast of 0.2%). Among the weak readings from overseas, broke the only indicator of Michigan consumer sentiment, which rose to 93.1.

Poor readings do not hurt the dollar too much, and the chance to raise interest rates, valued by the market oscillate around 70%.

The coming week promises to be extremely interesting due to a protocol of the FOMC, which will be announced on Wednesday. Earlier, however, investors will direct their attention to Monday's reading of the CPI in the euro zone. On Tuesday we will know the ZEW economic mood in Germany and base CPI in the US. Later in the week it will be worth to pay attention to the industrial rate by the Fed of Philadelphia.
Their presentations will note once again Mario Draghi.

The outlook for EUR / USD:
According to what I wrote in a recent report week, after completing the correction we should expect further declines towards the year's lows. Last week was marked correction, which led to test resistance level at 1,0808-1,0810. In my opinion, 1,0810-29 resistance zone should be a strong barrier to the demand side, and a good place for investors to open short positions.

Bearing in mind the speech of Mario Draghi Thursday, the single currency there is no basis to develop a larger correction. In addition, speculations related to the December meeting, the Fed should weigh the single currency.

Accordingly, breaking support levels at levels 1.0706 and 1.0673 should pave the way toward lower price levels. The first objective for the supply level will be 1.0600.

(All the time valid downtrend. Note, however, that in case of breaking above 1.0829 exchange rate, the demand side will head towards the next resistance zone at 1,0845-90. This is not, however, in my view, the preferred option).


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