EUR/USD Forex Forecast – Strong Business Activity Suggests the Euro Zone Will Avoid a Recession

The Euro is edging higher against the U.S. Dollar on Friday after a report showed Euro Zone business activity gathered pace last month as growth accelerated in the bloc’s dominant services industry, a survey showed, providing the latest piece of evidence suggesting the currency union will avoid a recession.

S&P Global’s Composite Purchasing Manager’s Index (PMI), seen as a good barometer of overall economic health, climbed to an eight-month high of 52.0 last month from 50.3 in January, a little shy of a 52.3 preliminary reading.

At 12:30 GMT, the EUR/USD is at 1.0608, up 0.0010 or +0.10%. On Thursday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $97.79, down $0.59 or -0.60%.

In other news, another 50 basis point increase to the European Central Bank’s deposit rate this month is a done deal, according to economists polled by Reuters, who expected an additional 25 basis point lift next quarter to give a terminal rate of 3.25%.

Also boosting the Euro is a weaker U.S. Dollar. It weakened as Treasury yields fell following less-hawkish comments on Thursday by Atlanta Fed President Raphael Bostic. He said that he advocated for continued 25 basis point increases.

Daily EUR/USD Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through 1.0533 will signal a resumption of the downtrend. A move through 1.1033 will change the main trend to up.

The minor trend is up. This is controlling the momentum. A trade through 1.0705 will reaffirm the trend. A move through 1.0566 will change the minor trend to down.

The Euro is currently straddling a minor pivot at 1.0613. The nearest resistance is a long-term 50% level at 1.0661. The closest support is a main bottom at 1.0483.

Daily EUR/USD Technical Forecast

Trader reaction to the minor pivot at 1.0613 is likely to determine the direction of the EUR/USD on Friday.

Bullish Scenario

A sustained move over 1.0613 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into 1.0661, followed by 1.0705.

Bearish Scenario

A sustained move under 1.0613 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into the minor bottom at 1.0566, followed by the main bottom at 1.0533.