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EUR/USD Price Forecast: Upbeat Production Numbers to Target $1.040

By:
Bob Mason
Published: Aug 12, 2022, 07:11 UTC

Following better than expected numbers from Germany, Eurozone industrial production will influence the EUR, which has been under pressure early on.

Main word currency Yuan, US Dollar and Euro - FX Empire

In this article:

For the EUR, it’s a quiet morning ahead on the Eurozone economic calendar, with Eurozone industrial production figures for June in focus. Following better than expected numbers from Germany, a pickup in industrial production would deliver EUR support. Economists forecast production to increase by 0.2%.

Earlier this morning, finalized French inflation figures for July had a muted impact on the EUR.

In July, the annual rate of inflation picked up from 5.8% to 6.1%, which was in line with prelim figures.

According to Insee.fr,

  • Year-on-year, an acceleration in prices for services (+3.9% after +3.3%), food (+6.8% after +5.8%), and manufactured goods (+2.7% after +2.5%) contributed.
  • In July 2022, consumer prices increased by 0.3%, following a 0.7% rise in June.
  • Prices of services jumped 1.3%, with prices of food up 1.0%.
  • By contrast, prices of manufactured goods declined by 1.6%.

EUR/USD Price Action

At the time of writing, the EUR was down 0.14% to $1.03067.

In a mixed start, the EUR rose to an early high of $1.03272 before falling to a low of $1.03048.

EUR/USD under pressure
EURUSD 120822 Daily Chart

Technical Indicators

The EUR/USD needs to avoid the $1.0320 pivot to target the Thursday high of $1.03643 and the First Major Resistance Level (R1) at $1.0365.

Eurozone industrial production figures will need to beat forecasts to support a breakout from $1.0350.

An extended rally would likely see the EUR/USD pair test resistance at $1.04 and the Second Major Resistance Level (R2) at $1.0409.

The Third Major Resistance Level (R3) sits at $1.0498.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0276 into play.

Barring an extended sell-off throughout the day, the EUR/USD steer clear of sub-$1.020, with the second Major Support Level (S2) at $1.0231 to limit the downside.

The Third Major Support Level sits at $1.0142.

EUR/USD support levels in play
EURUSD 120822 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bullish signal.

At the time of writing, the EUR sat above the 200-day EMA, currently at $1.02667.

After Wednesday’s bullish cross, the 50-day EMA pulled away from the 100-day EMA, with the 50 and the 100-day EMA narrowing to the 200-day EMA, which were positive price signals.

Avoiding a fall through the 200-day EMA would bring R1 ($1.0365) and $1.040 into view.

However, a fall through S1 ($1.0276) would bring the 200-day EMA ($1.02667) into play.

EMAs are bullish
EURUSD 120822 4 Hourly Chart

The US Session

It is a relatively quiet day for the Greenback. Prelim Michigan Consumer Sentiment figures for August will draw interest later today. Economists forecast an increase from 51.5 to 52.5. The latest inflation numbers, with better-than-expected labor market conditions and service sector activity, support a near-term pickup in sentiment.

With economic data on the quieter side, FOMC member chatter will also need monitoring.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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