The Euro is facing pressure from Germany the Eurozone’s leading economy as Germany inflation reached 1.9 percent nearing ECB’s 2 percent target to proceed with stimulus. ECB President Mario Draghi has his concerns about the overall performance of the Eurozone and stated that he remains unmoved as other EU countries are in debt and are dependent on the ECB’s support. The Euro has been extending losses to rival currencies and is declining against emerging markets such as the South African Rand (ZAR). Overall inflation for the Eurozone has been 1.8 percent which has ECB members questioning the low rate Draghi won’t budge to change. In a statement Draghi made it clear that there are concerns of German elections and steady and consistent growth should follow prior to becoming hawkish. Increasing rates will only slow down spending and growth as a result.
The Euro’s technical signals point towards the downside and most seem to be pointing towards the downside for a long period indicating Euro bears may dominate the Euro’s trend in February.
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EUR/CHF is a pair that usually trades sideways and mostly shifted by macro economic events. The pair attempted to trade towards the upside as a uptrend formed. Trendline support lied at 1.072 and the pair has since broken below those levels with the invalidated support turned resistance never to be seen as a psychological area to go short, instead EUR/CHF bears pressured the pair even lower. EUR/CHF now faces a resistance at 1.07 with 1.068 – 1.066 and 1.063 in extension as targets.
EUR/AUD has shed 60 pips from opening at 1.416 this week. The pair is currently trading at 1.41 with 1.404 support as a target. The pair’s overall trend is around 1.44 and 1.404 as it has been trading at these areas since October 2016. Eurozone and Australia’s February fundamental events may give the pair direction.
A monthly downtrend is threatening Euro bulls. On the daily, EUR/ZAR is capped in a range around 14.6 and 14.23 levels. The range has been evident since December 2016. Overall we see bearish sentiment for the pair with bullish sentiment only above 15. A break below 14.2 triggers 13.9.
The Sterling has been one of January’s top winners as CPI figures came at 0.5 versus a 0.2 forecast which was not a drastic change from the previous 0.7 figure. GDP also came in at 2.2 versus 2.1 forecast showing growth and independence from the U.K at least in the short-term. The Euro has shed 4% against the Cable from 0.885 to 0.85 within a space of January to February alone. EUR/GBP is facing support at 0.85 with bears edging to push it lower. EUR/GBP forecast with support and resistance levels.
There’s an upside to the Euro, EUR/USD finds itself facing a resistance at 1.075 and the pair has already tested 1.075 trading as high as 1.078 to the USD. The pair is trading in a rising channel with Euro bulls targeting 1.082.
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