EUR/USD Advance Ought to Proceed After Robust Financial Information

Basic Euro Forecast: Bullish

• Friday’s financial statistics exhibiting a second-quarter Eurozone GDP progress charge of 13.7% yr/yr and a July inflation charge of two.2% yr/yr will seemingly flip the European Central Financial institution extra hawkish on financial coverage; a constructive for EUR/USD and the Euro crosses.
• Furthermore, the pair eased Friday after strengthening from Monday to Thursday, suggesting that profit-taking after the advance may present merchants with a greater entry level for the commerce.

Euro worth nicely positioned to advance additional

Friday’s Eurozone knowledge caught forecasters abruptly. The area’s second-quarter financial progress charge got here in at a strong 13.7% yr/yr, even higher than the expected 13.2% and in contrast with a 1.3% contraction beforehand. Furthermore, the July inflation charge got here in at 2.2% yr/yr, above the forecast 2.0%, above the earlier 1.9% and above the European Central Financial institution’s 2.0% goal.

For positive, like different central banks, the ECB expects this excessive inflation charge to be transitory however, on the very least, the info ought to make its Governing Council suppose once more about delaying tapering its financial stimulus applications and that will nicely give EUR/USD one other leg greater.

EUR/USD Value Chart, Every day Timeframe (April 1 – July 30, 2021)

Supply: IG (You may click on on it for a bigger picture)

Because the chart above exhibits, the 1.19 stage appears to be offering resistance. Nonetheless, Friday’s fall in EUR/USD after a powerful week suggests there was some profit-taking and that would present Euro bulls with a greater entry level to profit from any additional advance.

Week forward: Remaining PMIs and German knowledge

As for the week forward’s knowledge, there may be little on the calendar. With merchants more likely to be specializing in the financial coverage conferences of the Reserve Financial institution of Australia and the Financial institution of England forward of Friday’s US employment report, Monday’s German retail gross sales figures for June and the ultimate Eurozone manufacturing PMI for July ought to move beneath the radar.

Equally, the ultimate Eurozone July providers PMI, Eurozone retail gross sales numbers for June, German manufacturing facility orders for a similar month and German industrial manufacturing knowledge additionally for June will seemingly garner little consideration.

— Written by Martin Essex, Analyst

Be happy to contact me on Twitter @MartinSEssex