Saxo Bank Forecast: EUR-USD Conversion Rate Hovers Near Psychological Level

Published: Wednesday, 9 December 2015 16:00 BST - Written by Tim Boyer

STORY LINK Saxo Bank Forecast: EUR-USD Conversion Rate Hovers Near Psychological Level

Euro Spot Rate Holds Gains after ECB Announcement

Last week’s European Central Bank (ECB) interest rate announcement had a profound impact on the currency market, with the EUR-USD exchange rate surging after the institution failed to adopt the aggressive approach to stimulus forecast by economists.

The Euro continues to trend higher against the US Dollar this week, with the pairing now approaching a key technical support level.

In the space of a week the Euro to US Dollar exchange rate surged from 1.0542 to 1.0982.

Euro to US Dollar 1.10 Level Predicted by Saxo Bank

Saxo Bank economist John Hardy started;

’Yesterday the USD showed pockets of resilience but today the ‘Greenback’ failed on all fronts even against the recently weak commodity currencies as risk appetite weakened sharply again into the early US trading hours with EUR-USD trading within a few pips of 1.1000 […] The technical implications for the US Dollar are not yet critical and we still have yet to see the outcome of next Wednesday’s Federal Open Market Committee meeting but the ‘Greenback’ needs to make a stand here soon or risk further technical damage and is always difficult to interpret technical developments when they unfold ahead of a critical event risk.’

Market-moving data has been in fairly short supply this week, with this morning’s German trade report having little impact on the Euro. The data showed that imports and exports to the Eurozone’s largest economy fell by more-than-forecast in October, with exports sliding -1.2% on the month and imports tumbling -3.4%.

John Hardy continued; ‘The local resistance provided by the highs late last week after the European Central Bank shocker have been tested today with the zone up to the psychologically important 1.1000 level and towards the 200-day moving average are the last resistance ahead of perhaps 1.1100.'

US Jobs, Sales Data Ahead – What Next for EUR-USD Trading?

Eurozone data is sparse again tomorrow but the US is set to publish initial jobless and continuing claims figures, both of which could inspire some moderate US Dollar movement. However, investors with an interest in the EUR-USD pairing are more likely to be looking ahead to Friday and the publication of the Advance Retail Sales number for November. Retail sales are believed to have increased by 0.3%, up from sales growth of 0.2% in October.

Meanwhile the University of Michigan Confidence Index preliminary reading for December has been projected to come in at 92.0, which would up from 91.3 in November and act as yet further justification for the US FOMC increasing interest rates next week.

While a policy adjustment from the Fed has been largely priced into the market already, if they use next week’s decision to offer additional detail on the pace/size of future rate adjustments the US Dollar may stage a rebound.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Daily Currency Updates Euro Forecasts Pound Sterling Forecasts