2107 Euro to Dollar Exchange Rate Forecast: "Weekly Chart Bullish, Monthly Candle is a Doji - Signaling Uncertainty"

Modified: Monday, 28 August 2017 13:43 BST - Written by John Cameron

STORY LINK 2107 Euro to Dollar Exchange Rate Forecast: "Weekly Chart Bullish, Monthly Candle is a Doji - Signaling Uncertainty"

The Euro to dollar exchange rate was able to make a late advance up to a best market level of 1.19 on Friday evening, ahead of the market close.

"Jackson Hole sank the USD broadly against most currencies" notes Maybank analyst, Saktiandi Supaat, in a brief today.

"Most notable price action was that of the EUR, lifted at first by Yellen who did not take a hawkish tone and then by ECB Draghi who did not mention anything about the currency strength. Even as Draghi reiterated the need for caution before the central bank can remove monetary stimulus as inflation is still slow, markets choose to buy the EUR through the 1.19-figure, perhaps eyeing an opportunity for further tapering announcement at its next meeting on 7 Sep. Along with the EUR, GBP was also lifted to a high of 1.2950 before coming off this morning."

According to Eric Theoret at Bank of Scotia the EUR/USD's "daily momentum signals are neutral and DMI’s are muted. The weekly chart remains bullish and the monthly candle is a doji—signaling uncertainty".

Euro Advanced on US Dollar Weakness

The late-week Euro to US Dollar advance was mainly due to the US Dollar plunging, given that Friday’s Eurozone data was generally disappointing.

Annual German GDP was revised up in the second quarter, but IFO survey scores for the German economy showed dwindling economic confidence.

In a succinct statement on the data, IFO President Clemens Fuest said;

‘Germany's economy remains on track for growth’.

As with the US, Euro traders had a vested interest in the Jackson Hole Symposium on Friday. Despite this, however, the period before a speech from European Central Bank (ECB) President Mario Draghi didn’t cause any major Euro devaluation.

US Dollar Update: Heavy Losses Triggered by Yellen’s Jackson Hole Speech

Last week for US Dollar traders saw an overriding focus on the Jackson Hole Symposium, a meeting of central bankers in the US.

The event started on Thursday and lasted until Saturday, but it was a speech on Friday which had the greatest impact on the US Dollar.

This came from the Chair of the Federal Reserve, Janet Yellen. Traders had been hotly anticipating Yellen’s remarks, as they provided a direct look at the thought process of the bank’s leader.

Yellen did trigger significant US Dollar movement – in the downwards direction. As well as dropping by -0.6% against the Euro, the US Dollar also fell by -1% against the South African Rand.

Instead of dropping hints of future interest rate hikes, Yellen instead struck a cautious tone, warning that the Fed had still not determined whether bank reforms had been effective.

In her own words, Yellen said;

‘The evidence shows that reforms since the crisis have made the financial system substantially safer. The annual stress-testing exercises in recent years have led to improvements in the capital positions and risk-management processes among participating banks’.

Any positive sentiment from this statement was quickly erased, however, when Yellen spoke about the reforms put in place after the late 2000’s financial crisis. Giving a dovish outlook, Yellen said that;

‘Substantial progress has been made toward the Federal Reserve's economic objectives of maximum employment and price stability, in putting in place a regulatory and supervisory structure that is…designed to…actually achieve a stronger financial system. [However, there is] more work to do’.

The crucial statement which dashed hopes of immediate monetary policy tightening was that;

‘[The Fed will continue to evaluate] where reforms are working and where improvements are needed to most efficiently maintain a resilient financial system’.

Also damaging the US Dollar late in the week was the release of durable goods orders data. In July, orders fell by more than forecast, coming in at -6.8% instead of by the expected -6%.

This Week’s EUR USD Outlook: Eurozone Confidence and Jobs Stats in Focus

The Euro could be dominant against the US Dollar this week, as traders look past Jackson Hole to upcoming confidence measures for the overall Eurozone.

German consumer confidence is tipped to rise on Tuesday, although Wednesday’s Eurozone-wide stats are forecast to be more mixed.

Providing further influence on an already-busy Wednesday, the afternoon will bring German inflation rate figures. Annual inflation is set to rise, but a monthly slowdown has also been projected.

Keeping inflation in focus, the Eurozone measure is out on Thursday and is set to show a potentially Euro-boosting rise. German and Eurozone unemployment is predicted to stagnate on Thursday, so this could leave the inflation stats as the main influencer.

This week’s US news to watch out for will cover GDP growth on Wednesday, as well as jobs figures later in the week. The US Dollar may rally in the former case as GDP is predicted to be revised up from 1.2% to 2.7%.

Friday’s jobs data will cover the change in non-farm payrolls, which is typically a volatile figure. If the number of jobs added exceeds estimates, then a late-week USD surge could be on the cards.

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: American Dollar Forecasts Currency Predictions Euro Forecasts