The euro continues to trade around the $1.07 mark, remaining close to the two-month low of $1.0633 reached on May 31st. Investors are anticipating the upcoming European Central Bank (ECB) monetary policy meeting next week. The ECB is expected to make changes to the interest rate, but there are signs that higher interest rates are beginning to have a significant impact on the eurozone economy.
The Eurozone economy has been officially confirmed to be in a moderate recession. Revised GDP data showed that in the first quarter, eurozone GDP contracted by 0.1%, instead of the previously forecast growth of 0.1%. In addition, the data for the fourth quarter were revised down by 0.1%. Both consumer and manufacturing inflation also slowed more than expected.
EUR/USD Weekly Forecast June 12 — 16, 2023
In the first quarter of 2023, household spending decreased by 0.3% (compared to -1% in the fourth quarter of 2022) due to high inflation and rising borrowing costs. Government spending also fell 1.6% (vs. +0.8%) as governments ease stimulus measures that have partially offset the impact of rising energy prices. Among the largest economies in the Eurozone, GDP contraction was observed in Germany (-0.3%) and the Netherlands (-0.7%), while France (0.2%), Italy (0.6%) and Spain (0.5%) showed growth.
The currency pair Euro/Dollar EUR/USD completes the trading week near the area of 1.0770 and continues to move as part of the decline and the completion of the formation of a large double top reversal pattern. Moving averages indicate a bullish trend. Prices are again testing the area between the signal lines, which indicates pressure from buyers of the European currency and a likely continuation of growth from current levels. At the moment, we should expect an attempt to develop a bullish correction of quotes and a test of the resistance area near the level of 1.0935. Where is the expected rebound down and the continuation of the fall of the Euro Dollar. The potential target of the decline is the area below the level of 0.9805.
An additional signal in favor of a decrease in the EUR/USD currency pair on Forex will be a test of the resistance line on the relative strength indicator (RSI), while the values are rebounding from the support area on the RSI indicator chart, so there is a high probability of a strong bullish correction before the fall. The second signal will be a rebound from the lower border of the bullish channel, which was broken down by the sellers. Cancellation of the option of falling quotes of the Euro/Dollar pair in the current trading week June 12 — 16, 2023 will be a strong growth and a breakdown of the level of 1.1265. This will indicate a breakdown of the resistance area and continued growth of the pair to the area above the level of 1.1675. With the breakdown of the support area and the closing of quotes below the level of 1.0385, which will indicate the breakdown of the lower border of the “Double Top” reversal pattern and the beginning of the pattern with targets at the bottom.
EUR/USD Weekly Forecast June 12 — 16, 2023 suggests an attempt to develop a bullish correction and test the resistance area near the level of 1.0935. Where should we expect the price to bounce down and the pair continue to fall in the Forex market to the area below the level of 0.9805. An additional signal in favor of the decline will be a test of the resistance line on the relative strength index (RSI). Cancellation of the option of falling Euro Dollar will be a strong growth and a breakdown of the level of 1.1265. In this case, we should expect the pair to continue to rise with a potential target at the level of 1.1675.
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