EUR/USD Forecast: odds for a break lower increase by year-end

The EUR/USD pair is closing with modest gains for a second consecutive week, not far from the year low established last November at 1.0517. After spending the week consolidating around the 1.0600 level, the EUR found some limited support in the a mixed US employment report, which showed that jobs creation maintain the strong pace seen for the past two years, but also that wages fell: average hourly earnings came in at -0.1% MoM way below consensus of0.2%  and previous month reading of 0.4%, while the year-on-year reading fell to 2.5% from previous 2.8%.  

The macroeconomic focus now veers towards upcoming ECB and FED's meetings, with the first expected to announce a QE extension next Thursday, and the second to raise rates one week later. Despite lower wages are a drag to inflation, the FED will likely raise rates anyway, as a 0.25% will be less damaging that the loss of credibility, after over a month of preparation jawboning.

From a technical point of view, an interim bottom at the mentioned yearly low can't be confirmed just yet, given that these last two-weeks' recovery seems barely corrective, as the price remains below the 23.6% retracement of the 1.1299/1.0517 decline at 1.0700. In the daily chart, the recovery stalled around a sharply bearish 20 DMA, while technical indicators have lost upward momentum well below their mid-lines. Furthermore, dollar's decline has been steeper against other major rivals, somehow suggesting that there's no interest in the common currency.

Whatever the ECB decides this upcoming week, seems it won't be enough to determinate a clear trend in the pair, as the market will turn its eyes to the FED. Still a break of the 1.0500/700 region will likely see some nice follow-through. The immediate support is 1.0590, followed by the 1.0505/20 region, with a break below this last exposing 2015 low at 1.0460. Above 1.0700 on the other hand, the pair can recover up to 1.0815, the 38.2% retracement of the mentioned decline.

Upcoming Central Banks' moves have been pretty much priced in, but sentiment continues favoring the greenback, according to the FXStreet Forecast poll, with the American currency seen higher against most of its major rivals in a three-month view.

EUR/USD: a floor may be reached, but gains are out of the table

The EUR/USD pair is seen falling within range next week, with 62% of the experts polled beating on a downward extension, but not below 1.0500. By year end, a modest recovery could be expected, as sentiment turns bullish in a one-month view, although some of the bears are looking for a break below the key 1.0460 support. Chances of fresher lows increase in a three-month view, but with limited odds of reaching parity.

USD/JPY: deeper correction expected, seen below 110.00 in a three-month view

Surprisingly, the USD/JPY pair is an exception in this dollar's positive environment, with the pair expected to retreat further after nearing 115.00 this week. The bearish sentiment grows in term, with an overwhelming 70% of experts seeing the pair lower in a three-month view, down to the 108.00 region. Still, and according to comments, renewed strength beyond 114.00 will likely deny the case of a deeper correction.

GBPUSD: bearish sentiment persists, but downside now  limited by 1.2400

Hopes for a softer Brexit has helped the Pound to recover some ground this week, and while market sentiment is still negative towards the Sterling, the slides are now seen more moderated. For the upcoming week, 64% expect a decline, but nobody expects slides below 1.2300. In a one-month view, bears shrink to 58%, with 1.3000 being considered in the case of a recovery. The pair will resume its decline afterwards, but once again, chances of a downward extension below 1.2300 are limited.