Euro Forecast: EUR/USD Recovery Persists Ahead of Euro Area CPI Report

Euro Outlook: EUR/USD

EUR/USD extends the advance from the start of the week as the Euro Area Gross Domestic Product (GDP) report shows a larger-than-expected rise in the growth rate, and the exchange rate may further retrace the decline from the start of the month as the Relative Strength Index (RSI) continues to recover from oversold territory.

Euro Forecast: EUR/USD Recovery Persists Ahead of Euro Area CPI Report

EUR/USD trades to a fresh weekly high (1.0871) as the Euro Area expands 0.4% in the third quarter of 2024 versus forecasts for a 0.2% print, and little signs of an imminent recession may encourage the European Central Bank (ECB) to the keep interest rates on hold following the 25bp rate cut at the October meeting.

Join David Song for the Weekly Fundamental Market Outlook webinar. David provides a market overview and takes questions in real-time. Register Here

In turn, the ECB may continue to unwind its restrictive policy at a gradual pace as the central bank is ‘determined to ensure that inflation returns to our two per cent medium-term target in a timely manner,’ but the update to the Euro Area Consumer Price Index (CPI) may put pressure on the central bank to achieve a neutral policy sooner rather than later as the report is anticipated to show another slowdown in core inflation.

Euro Economic Calendar

Even though the headline CPI is expected to increase to 1.9% in October from 1.7% per annum the month prior, the core reading is seen narrowing to 2.6% from 2.7% during the same period.

With that said, signs of easing price growth may curb the recent recovery in EUR/USD as it fuels speculation for another rate cut at the next ECB meeting on December 12, but an uptick in both the headline and core CPI may generate a bullish reaction in the Euro as it raises the central bank’s scope to further combat inflation.

EUR/USD Chart – Daily

Chart Prepared by David Song, Strategist; EUR/USD on TradingView

EUR/USD rises after defending the monthly low (1.0761) earlier this week, and the Relative Strength Index (RSI) may continue to show the bearish momentum abating as it moves away from oversold territory.
A break/close above the 1.0860 (50% Fibonacci retracement) and 1.0880 (23.6% Fibonacci extension) region brings the 1.0940 (50% Fibonacci retracement) to 1.0960 (61.8% Fibonacci retracement) zone back on the radar.
However, failure to break/close above the 1.0860 (50% Fibonacci retracement) and 1.0880 (23.6% Fibonacci extension) region may push EUR/USD back towards the monthly low (1.0761), with a close below 1.0770 (38.2% Fibonacci retracement) open up the June low (1.0666).

Additional Market Outlooks

Monetary vs Fiscal Policy: Implications for FX Markets

US Personal Consumption Expenditure (PCE) Report Preview (SEP 2024)

British Pound Outlook: GBP/USD Recovery Emerges Ahead of UK Budget

USD/CAD Eyes August High as RSI Holds in Overbought Territory

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.