- On Friday, EUR/USD returned to a bearish course.
- The broad rise in the dollar index continues to hit the euro.
- Next week: summer time, CPI in the EU, PCEPI in the US and another NFP printout.
EUR/USD made a short-term rebound on Friday, slamming the door to a pure bullish recovery and keeping rates near the 1.0800 level to end the trading week. Fiber lost another half a percent from Monday’s opening bids, losing a fourth straight week of losses and dragging price action even further down from its slow September high just north of 1.1200.
Markets will start next week with the introduction of summer time across the European continent, which will shift market opening hours by an hour. The first half of the trading week is silent, with euro investors looking ahead to Wednesday’s update on economic growth in Europe. EU-wide gross domestic product (GDP) growth is expected to remain stable in the third quarter and is forecast to be in line with the previous quarter’s 0.2%. Meanwhile, the annual growth rate is expected to escalate from 0.6% to 0.8% y/y.
Next Thursday will mark the end of the euro’s representation in the economic calendar, with the preliminary Harmonized Index of Consumer Prices (HICP) inflation for October. Headline HICP inflation in the EU is expected to escalate to 1.9% y/y compared to 1.7% in the previous period.
Next week will be a large one for US dollar investors. The US Consumer Expenditures Price Index (PCEPI) will be released on Thursday, followed by another round of monthly non-farm payrolls (NFP) data on Friday. The Core US PCCEPI index is expected to escalate in September and will amount to 0.2% m/m compared to 0.1% in August. Net up-to-date NFP jobs in the U.S. are expected to decline to a moderate 140,000. net up-to-date jobs added in October, up from 254,000. printouts from the previous month.
EUR/USD price forecast
The EUR/USD pair is currently trading below the 50-day EMA and 200-day EMA, signaling bearish market sentiment. The recent price action shows the powerful downtrend from early October when the price broke below the 50-day EMA and continued to fall below the 200-day EMA, further confirming the bearish bias. The current price near 1.0795 is testing the support zone, as evidenced by small-body candles, suggesting some consolidation or a phase of indecision. If support holds, we could see a transient pullback towards the resistance level at 1.0899, coinciding with the 200-day EMA. However, failure to break higher could create further downward pressure.
The MACD histogram shows weakening negative momentum, but the signal lines remain in a bearish area, suggesting that sellers are still in control despite a possible short-term correction. If the price fails to break above the 50-day EMA near 1.0962, the pair may continue its decline. Smart Money Concepts (SMC) investors may see illiquidity developing below previous lows, potentially indicating institutional accumulation for a pullout. However, if key resistance zones are not rebuilt, the overall structure will remain bearish and a break below 1.0750 could open the way to further declines towards 1.0650.
