EUR/USD Weekly Forecast: Private Sector PMIs and Central Banks in Focus

Highlights

• The EUR/USD surged 2.10% to $1.09088 in the week ending November 17.
• In the week ending November 24, private sector PMIs for November will impact near-term EUR/USD trends.
• ECB and Fed meeting minutes and speeches will also be in focus.

Weekly Overview of Week Ending November 17, 2023

In the week ending on November 17, the EUR/USD surged 2.10%, ending the week at $1.09088. The EUR/USD fell to a Monday low of $1.06650 before rising to a Friday high of $1.09139.

European Economic Indicators to Consider

On Monday, German producer price figures for October will garner investor interest. A less marked decline in producer prices could signal an improving demand environment. Producers adjust prices to win new clients. Lower prices signal a more competitive, low-demand environment.

However, prelim private sector PMIs for France, Germany, and the Eurozone will have more influence on EUR/USD trends. Higher private sector PMIs would suggest an improving demand environment for euro area private sector firms.

The services sector could have more influence on buyer appetite for the EUR/USD., contributing over 60% to the Eurozone economy. A more marked contraction in service sector activity could ease the need for a hawkish ECB rate path. The services sector was the largest contributor to inflation in October.

However, investors must consider the sub-components. Optimism, prices, new orders, and employment will provide a clearer view of the macroeconomic environment.

On Friday, Q3 GDP and business sentiment numbers for Germany will need consideration. A larger-than-expected economic contraction and a slump in business sentiment could spook EUR buyers.

ECB Influences

While the stats require consideration, the ECB Monetary Policy Meeting Minutes, Financial Stability Report, and speeches will also move the dial. ECB President Lagarde and Chief Economist Philip Lane are on the calendar to speak.

A more dovish stance about rate cut discussions could test the appetite for the EUR/USD.

US Economic Calendar a Focal Point

On Tuesday, the FOMC meeting minutes will be the focal point. After the recent inflation and retail sales figures, the markets are betting on a May Fed rate cut. However, Fed speakers have yet to provide the markets with a reaction to the numbers. Hawkish Fed commentary could fuel a recovery in the US dollar.

The minutes will likely offset the influence of core durable goods orders. Core durable goods orders are out on Wednesday.

On Friday, prelim private sector PMIs for November wrap up the week. The US services sector contributes over 70% to the US economy. An unexpected contraction across the US services sector could fuel fears of a hard landing and raise bets on a May Fed rate cut.

With the markets focused on the timing of a Fed rate cut, FOMC member speeches need monitoring.

Short-Term Forecast:

The near-term trends for the EUR/USD hinge on the preliminary private sector PMIs and respective central bank speeches. A resilient US economy and a weak outlook for the Eurozone economy could impact the buyer demand for the EUR/USD.

EUR/USD Price Action

Daily Chart

The EUR/USD held above the 50-day and 200-day EMAs, sending bullish price signals.

A EUR/USD break above the $1.09294 resistance level would support a move to the $1.10720 resistance level.

Central bank speeches and prelim private sector PMIs will likely be the focal points.

A drop below $1.08500 would support a fall to the $1.07838 support level. Dire euro area private sector PMIs could give the bears a run at the 200-day EMA.

The 14-period Daily RSI at 69.70 shows the EUR/USD on the border with overbought territory. Selling pressure will likely intensify at the $1.09294 resistance level.

4-Hour Chart

The EUR/USD holds above the 50-day and 200-day EMAs, with the EMAs reaffirming bullish price signals.

A EUR/USD break above the $1.09294 resistance level would give the bulls a run at the $1.10720 resistance level.

However, a drop below $1.08500 would bring the $1.07838 support level and 50-day EMA into play. Buying pressure will likely intensify at $1.07830. The 50-day EMA is confluent with the $1.07838 support level.

The 14-period 4-Hourly RSI at 74.13 shows the EUR/USD sitting in overbought territory. Selling pressure will likely intensify at the $1.09294 resistance level.