EUR/USD Weekly Forecast - 11 June

Saturday, Jun 09 2018

EUR/USD broke a long losing streak and recovered from the lows, albeit not closing on the highs. After things calmed down in Italy, the euro got another boost from the ECB. The central bank will debate an exit from the QE program in the upcoming week. This is contrary to a refusal deal with it earlier and it helped the common currency recover. Data during the week was mixed. The US dollar suffered a profit-taking sell-off early in the week and also ignored upbeat data such as the ISM Non-Manufacturing PMI. It then slightly recovered as fear began creeping in.

The ECB decision is left, right, and centre in a week in the shadow of frictions around global trade.

Major events in the coming week:

French Final Private Payrolls: Tuesday, 5:30. The final read will likely confirm initial 0.3% expansion in workforce.
German ZEW Economic Sentiment: Tuesday, 8:00. Germany’s ZEW institution reported a pessimistic sentiment in the past two months with a score of -8.2 points. For the month of June, this pessimism is forecast to deepen with a fall to -14.6 points.
Employment Change: Wednesday, 9:00. An increase of 0.3% is on the cards for Q1 2018.
Industrial Production: Wednesday, 9:00.
German Final CPI: Thursday, 6:00. The final read is expected to confirm the initial CPI release of 0.5% rise for May.
French Final CPI: Thursday, 6:45. Final read is expected to confirm initial May CPI rise of 0.4%.
Rate decision: Thursday, 11:45, with the press conference at 12:30. The current QE program runs through September and has a pace of 30 billion euros per month. Markets expect further bond buying at the three remaining months of the year, albeit at a slower pace, before purchases come to an end. A clear commitment to end QE with an end date could boost the euro while a more vague statement about future moves could weigh on it. If Draghi only says that a discussion was held but does not make any announcements, the drop could be sharper. The forecasts for inflation and growth could also have an impact.
German WPI: Friday, 6:00.
Final CPI: Friday, 9:00. The final read is expected to confirm the initial read: 1.9% on the headline and 1.1% on the core.
Trade balance: Friday, 9:00. The euro-zone trade surplus stood at 21.2 billion euros in March and is now forecast to slightly squeeze to 20.2 billion.