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EUR/USD Forecast July 11-15

By Kurt Osterberg · On July 9, 2016

EUR/USD suffered in a fresh bout of Brexit-related selling but the slide seems limited. Will the fall accelerate now? Inflation figures stand out. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.

After some calm in markets, reality began biting in on Brexit. Apart from the withdrawal freeze in some UK property funds, the impact on the euro has been via bond yields which are tumbling down. With more and more assets providing negative yield, the ECB has less assets to buy in its 80 billion euro QE program. This spells trouble for Draghi. Services PMIs in the euro-zone still look OK but they do not seem to reflect the post-Brexit world. Factory orders in Germany do paint a more gloomy picture. In the US, the NFP came out better than expected and temporarily helped the greenback.

Updates:

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

Eurogroup meetings: Monday. Finance ministers of the euro-zone convene to discuss various matters. Sanctions against both Portugal and Spain following their missed budgets are high on the agenda. A discussion about Greece’s debt is also on the cards. And of course, the financial situation in the continent following Brexit will certainly be discussed. If finance ministers express concern, it could hurt the euro. Spelling out optimism and a plan could be helpful.

German inflation figures: Tuesday, 6:00. According to the initial read, prices advanced by 0.1% in Germany in June. This was in line with expectations. The final figure will probably confirm it. The Wholesale Price Index is another inflation indicator. This time it is expected to rise 0.3% m/m after 0.9% last time.

French Final CPI: Wednesday, 6:45. The second largest economy saw prices advancing by 0.2% m/m in June and also here, a confirmation is on the cards.

Industrial Production: Wednesday, 9:00. Industrial output in the euro-zone is released after the main countries have already released their figures. Nevertheless, surprises are quite common here. A nice rise of 1.1% was reported in April. We now get the figures for May. A drop of 0.8% is expected.

Final CPI: Friday, 9:00. The initial inflation numbers from the euro-zone came out better than expected: headline inflation returned to positive ground with 0.1% y/y and also core inflation advanced from the lows and hit 0.9%. These numbers will probably be confirmed now.

Trade Balance: Friday, 9:00. The euro-area enjoys a wide surplus, mostly thanks to Germany’s exports. A surplus of 28 billion was seen in April and May could be similar: 25.2 billion euros.