Fundamental Forecast for EUR/USD: Neutral
- The Euro[1] has continued with its bottoming process started two weeks ago, gaining ground against all but two currencies last week.
- Economic data has started to improve more broadly alongside inflation expectations, and now traders will look to ECB President Mario Draghi’s two speeches this week for clues on monetary policy.
- The IG Client Sentiment Index[2] suggests a neutral outlook for EUR/USD[3], but retail traders have started to increase their net-long positioning.
See our long-term forecasts for the Euro and other major currencies with the DailyFX Trading Guides[4].
The Euro was a top three performing currency last week, gaining ground against all but two of the majors. EUR/USD was the performing EUR-cross, gaining +0.53% during the holiday shortened week as the US Dollar[5] was hampered by the official commencement of the US-China trade war. And while market participation has been low thanks to the World Cup, the upcoming slate of Eurozone economic data and events should draw more interest than what’s been seen thus far in July.
Economic data has started to improve more broadly alongside inflation expectations, and now traders will look to ECB President Mario Draghi’s two speeches this week for clues on monetary policy. The Citi Economic Surprise Index for the Eurozone, which was at a near-seven year when it was -100.1 on June 8, rebounded to -36.1 by the end of last week. The final June Eurozone Consumer Price Index due in on Thursday at +2.1% y/y will underscore the extent to which data has stabilized.
Accordingly, now that data momentum is back on the upswing
