Euro extends the gains marginally after the EC raised its outlook for the EU last week. This week market participants focus on the ECB event. Four central banks chairs will speak on Tuesday at the Central Bank Communications Conference hosted by the ECB. We mainly focus on Carney, Draghi and Yellen’s speeches. The event has presented trading opportunities on EURUSD,EURGBP, GBPUSD and USDJPY.

According to the European Commission (EC) Autumn 2017 Economic Forecast, “The EA economy is on track to grow at its fastest pace in a decade this year, with real GDP growth forecast at 2.2%. This is substantially higher than expected in spring (1.7%). The EU economy as a whole is also set to beat expectations with robust growth of 2.3% this year (up from 1.9% in spring)”.

Press release: https://ec.europa.eu/info/business-economy-euro/economic-performance-and-forecasts/economic-forecasts/autumn-2017-economic-forecast_en#autumn-2017-economic-forecast-continued-growth-in-a-changing-policy-context

KTM Full story:  EURUSD lifted within the downtrend channel.

After the October dovish taper announcement, we expect Draghi likely to deliver a dovish tone again. In the EZ economy, ECB October meeting and last week’s EC strike a positive approach. In the October meeting, ECB sounds optimistic on the back of a continued EZ recovery especially in the 2H of this year. Draghi said “unabated growth momentum in the second half of this year”.

 Data review:

  • Germany factory orders had increased +1.0% in Sep
  • Spain Service PMI posted 54.6 in October, down from 56.7 in September
  • France Service PMI posted 57.3 in October, up from 57.0 in September
  • Germany final Service PMI was at 54.7 in October, down from September’s six-month high of 55.6
  • EZ Final Eurozone Services was at 55.9 slightly up from flash estimate 54.9
  • Germany Sep IP was down by -1.6% vs +2.6%

 Data preview:

Relatively light economic calendar data. We mainly focus on EA Final CPI Y/Y basis (Thu) .

  • Nov 14

EA GP Q/Q basis, forecast 0.6% vs 0.6%

EA IP, likely to narrow -0.6% vs 1.4%

  • Thu, Nov 16

EA final CPI Y/Y basis, forecast 1.6% vs 1.6%

 TECHNICAL VIEW

Last week’s price action turned to green after three-weeks of consecutive losses.  Before rebounds to 1.1678 the price has re-tested an interesting falling trendline but still trading below the broken neckline (below chart).

The Euro was in demand last week after the EC raised the EZ outlook. Besides increasing uncertainties about current tax reforms drag the USD slightly lower. Ahead of the Draghi and Yellen speech, and inflation readings from EA and US we expect EURUSD offers limited upside this week.

Further dollar weakness could allow a minor extension within the falling channel. It has a potential resistance zone seems between 1.1690 and 1.1730 above this it’s 50MA 1.1790 exists. The daily oscillator turns bullish.

In the medium term, we are still watching for 1.1460 it’s 100.0 fe/ the classic H&S pattern target and 1.1430 it’s 38.2% ( Jan-Sep rally) fib reaction. The medium-term support finds at 1.1245 it’s 200DMA and 1.1200 20MA (monthly).

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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