Technical Forecast for the Euro: Bearish
- The Euro has been cut down to size in recent days, and technical studies among various EUR-crosses suggest that the weakness may continue.
- Net-long Euro positioning is now at its lowest level since July 2020 – and the reporting period ended prior to the selloff on Thursday and Friday.
- The IG Client Sentiment Index suggests that EUR/GBP and EUR/USD are still vulnerable to more downside, while EUR/JPY has a neutral bias.
Euro Rates Week in Review
It was a rough week for the Euro. Losing ground against five of the other seven major currencies, three EUR-crosses posted losses in excess of -1% (EUR/CAD -1.98%; EUR/USD -1.34%; EUR/AUD -1.08%). Meanwhile, the two EUR-crosses that managed to finish in positive did not gain more than +1% (EUR/CHF -0.91%; EUR/JPY -0.29%).
Trading at the end of the week took on more of a risk-on tone in the wake of the February US jobs report, and if the reflation trade continues to gather pace (higher US yields, higher US equities, higher US Dollar), the Euro is a prime culprit for more losses as the Euroarea maintains one of the more pitiful COVID-19 vaccination rates across the developed world – a sign that it may lag other economies in regaining its potential post-pandemic.
No matter where you look, the Euro is under a great deal of technical pressure: versus the commodity currencies (EUR/AUD, EUR/CAD, EUR/NZD) or even against the Nordic currencies (EUR/NOK, EUR/SEK). In this week’s technical review, we’ll examine the damage wrought upon the three major EUR-crosses: EUR/GBP, EUR/JPY, and EUR/USD.
Recommended by Christopher Vecchio, CFA
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Euro Economic Calendar Week Ahead
Before turning to the charts, a quick look at the Euroarea economic calendar for the week ahead, which always has the potential to induce event-risk volatility.
– On Tuesday, March 9, January German balance of trade, January Italian industrial production, and the final 4Q’20 Euroarea GDP growth readings will be released.
– On Wednesday, March 10, January French industrial production is due.
– On Thursday, March 11, the European Central Bank rate decision will be announced, and ECB President Christine Lagarde will hold a press conference.
– On Friday, March 12, final February German inflation rates and January Euroarea industrial production figures will be released.
For full Euroarea economic data forecasts, view the DailyFX economic calendar.
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