EURUSD Forecast: Sunny With A Chance Of Upward Breakout…

Newsletter

Zero spam.

Market released a slew of data out of Europe today for the new week, month, and quarter, and needless to say, the sentiment has been positive.  Here’s why:

  • (EU) EURO ZONE SEPT FINAL PMI MANUFACTURING: 46.1 V 46.0E
  • (EU) EURO ZONE AUG UNEMPLOYMENT RATE: 11.4% V 11.5%E (fresh record high)
  • (DE) GERMANY SEPT FINAL PMI MANUFACTURING: 47.4 V 47.3E
  • (FR) FRANCE SEPT FINAL PMI MANUFACTURING: 42.7 V 42.6E (41 month low)
  • (IT) ITALY SEPT PMI MANUFACTURING: 45.7 V 44.0E
  • (ES) SPAIN SEPT MANUFACTURING PMI: 44.6 V 44.2E (highest since Feb 2012)
  • (GR) GREECE SEPT MANUFACTURING PMI: 42.2 V 42.1 PRIOR
  • (UK) SEPT PMI MANUFACTURING: 48.4 V 49.9E

With the exception of UK, we are seeing across the board better than expectation releases, although still in contraction territories for the PMI readings (50 is the medium/neutral point), all are showing signs that the economy is bottoming out, and that the next move is anything but up…

3rd Party Advertisement

The situation in Greece also improved as there were talks that Greece will get its €31.5B of aid soon, especially after Troika extended an additional week in their evaluation, giving PM Samaras a chance to come up with another €2B in budget cuts to satisfy the €13.5B figure for the next year.  As one German magazine wrote:

“The report being drawn up by the ‘troika’ will turn out in such a way that the money can be paid out,”  

… because the fear of a ‘domino effect’ in the Euro Zone is too great, another senior EU official said to Reuters, and also because the Euro Zone does not want Greece to leave the common currency… No matter what’s the reason, Greece will get its aid and market will have a reason to buy the Euro…

As far as Spain is concerned, with the new budget and the results of the bank stress test (and the comments of only requesting €40B in the already approved €100B banking aid), Spain is likely to move on with a bailout request soon…  Of course, they will wait until after the banking aid, but with their budget/austerity already paved the way for bailout, it makes no logical sense to me if Rajoy do not follow through with it… Why deal with protests and civil unrests unless you have an end game planned? So my conclusion is that Spain will probably make the official request before year end…

All in all, my EURUSD forecast is to buy on dips, as this is the quarter where traders attempt to recover their losses throughout the year, and with the blessing of fundamentals, we could see EURUSD making an upward breakout to the 1.3500 levels.

 

 

FUNDAMENTALS
Forex Weekly Outlook September 18 ~ 22, 2017
Forex Weekly Outlook August 14 ~ 18, 2017
Forex Weekly Outlook August 7 ~ 11, 2017
Forex Weekly Outlook July 3 ~ 7, 2017
Forex Weekly Outlook June 19 ~ 23, 2017
About Henry Liu

My name is Henry Liu and I am a Forex Trader and Mentor. I help traders achieve consistent income trading Forex while spending less time trading. My focus in trading is a combination of Fundamental Analysis, Technical Analysis, and Market Sentiment. Far too many retail Forex traders concentrate on just one aspect of trading, technical analysis, and ignore everything else; it is my goal (and vision) to educate every trader on how to take advantage of news trading and become more balanced traders.

You can find more information about me on my Google Profile.

Trackbacks

  1. […] PMI readings in contraction territories as the trend of decline continues. Although data out of Europe started to show surprises to the upside,  investors still remained cautious over the ongoing Greek and Spanish situations that […]

Speak Your Mind

*

Newsletter

Zero spam.