EUR/USD Forecast: Can euro crack 1.1700 ahead of the weekend?


  • EUR/USD has gone into a consolidation phase before testing 1.1700.
  • Following the ECB-inspired rally, EUR/USD awaits EU growth data and US inflation report.
  • Near-term technical outlook points to a correction before the next leg up.

Fueled by the European Central Bank's (ECB) policy statement and the broad-based dollar weakness, EUR/USD has climbed to its highest level in a month near 1.1700 before going into a consolidation phase on Friday.

The shared currency managed to capitalize on the ECB's cautious tone regarding the inflation outlook. ECB President Christine Lagarde acknowledged that high inflation was expected to last longer than initially anticipated while keeping a relatively optimistic view of the economic state. However, it's also worth noting that Lagarde voiced her opposition to market pricing of a rate hike in late-2022.

Nevertheless, the euro was able to outperform its rivals as investors seem to be thinking that the ECB could prioritize price stability over growth in the near term.

Friday's data could make or break this view. The euro area Gross Domestic Product (GDP) is expected to expand by 3.5% in the third quarter following a 14.3% growth in the second quarter. In the meantime, the data from Germany revealed that the economy grew by 1.8% on a quarterly basis, missing the market expectation of 2.2%.

A weaker-than-expected GDP print could make it difficult for the common currency to preserve its strength ahead of the weekend. On the flip side, a strong reading is likely to help EUR/USD push higher.

In the second half of the day, the Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred gauge of inflation, data from the US will be looked upon for fresh impetus as well. The Core PCE Price Index, which excludes volatile food and energy prices, is forecast to tick higher to 3.7% on a yearly basis in September from 3.6%. On Thursday, the US Bureau of Economic Analysis reported that the annualized Real GDP grew by 2% in the third quarter. With this figure falling short of analysts' estimate of 2.7%, the dollar faced renewed selling pressure. A soft inflation report could suggest that the Fed might opt out to wait until December before starting to reduce asset purchases and force the dollar to remain on the back foot ahead of the weekend.

EUR/USD technical analysis

With Thursday's upsurge, EUR/USD broke above 1.1670 resistance but lost its momentum before reaching 1.1700. The Relative Strength Index (RSI) indicator on the four-hour chart is edging lower after reaching 70, suggesting that the pair is now making a technical correction.

Currently, the pair is trying to flip 1.1670 into support and buyers could try to test 1.1700 as long as this level holds. Above 1.1700 (psychological level), the next resistance aligns at 1.1720 (Fibonacci 50% retracement of September downtrend) before 1.1770 (Fibonacci 61.8% retracement).

On the downside, 1.1670 (Fibonacci 38.2% retracement, former resistance) is the first support ahead of 1.1635 (50-period SMA) 1.1600 (psychological level, 100-period SMA).

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD drops below 1.1300 for the first time in two weeks

EUR/USD remains under bearish pressure in the American session on Monday and trades at its lowest level in two weeks slightly below 1.1300. US Markit Manufacturing and Services PMIs missed market expectations by a wide margin in early January. The S&P 500 Index is down nearly 2% after the opening bell.

EUR/USD News

GBP/USD extends daily slide toward 1.3450

GBP/USD continues to stretch lower toward mid-1.3400s on Monday as the mood continues to sour. Wall Street's main indexes are down between 1.7% and 2.1% after the disappointing PMI data from the US.

GBP/USD News

Gold declines toward $1,830 despite falling US bond yields

Gold climbed above $1,840 during the European trading hours but erased its daily gains to turn flat on the day at around $1,830. The benchmark 10-year US T-bond yield is down more than 2% on Monday as safe-haven flows continue to dominate the financial markets. 

Gold News

Crypto carnage continues to unfold

Bitcoin price has witnessed a massive crash over the past week, undoing the gains seen since July 25. Ethereum, Ripple and other altcoins have followed suit, experiencing an even worse crash. 

Read more

Nvidia extends losses after Bitcoin’s overnight flash crash

NVDA investors are getting used to seeing the colour red after a year in 2021 when all they saw was green. On Friday, shares of NVDA fell by 3.21% and closed the final trading day of the week at $223.74.

Read more

Majors

Cryptocurrencies

Signatures