Sumary of EUR/USD Forecast: Euro Hits Pre-COVID Levels, Further Weakness to Come?:
- EUR/USD AnalysisDovish ECB grapples with COVID-19 hesitancy and higher inflation.
- EURO FUNDAMENTAL BACKDROPEURO AREA FACES GROWING CHALLENGESThe European Central Bank (ECB) have thus far remained the most accommodative of the major central banks and now have added complexity to their task with the recent spread of COVID-19 throughout the Euro area.
- High-spirited dollar bulls may be disappointed short-term as I think there may be a slight correction but the fundamental picture in Europe against the U.S. is distinctly divergent.
- Ceteris paribus, the difference between EUR and USD fundamentals should see long-term gains for the greenback against the Euro.
- Later today, U.S. PMI data (see calendar above) could swing momentum back in favor of EUR/USD bears – data dependent.
- EUR/USD TECHNICAL ANALYSISEUR/USD WEEKLY CHART:Chart prepared by Warren Venketas, IGThe broader picture shows EUR/USD trading within a triangle formation (symmetrical) – pattern that favors neither bulls nor bears.
- The weekly chart above also shows the potential for further downside towards the 1.1000 psychological level.