EURUSD on Friday rose 0.43% to 1.10253. Week ending 2024-08-16 rose 1.02%. What’s going on.

EURUSD Analysis

Performance
Period	Pct	Chg	Momentum
Friday	0.43%	47.2 Pips
Week 2024-08-16	1.02%	111.5 Pips	August	1.86%	201.4 Pips

Upcoming key events for the new week (London Time)

Wed 07:00 PM FOMC Meeting Minutes
Thu 01:30 PM Initial Unemployment Insurance Claims
Fri 03:00 PM Jackson Hole Symposium
Fri 03:00 PM Federal Reserve Chair Jerome Powell speech (Jackson Hole Symposium)

What happened over the week

The United States experienced several mixed economic developments in recent reports. According to the University of Michigan, the Consumer Sentiment Index rose to 67.8 in August from 66.4 in July, indicating improved consumer confidence. However, the Census Bureau reported a decline in Housing Starts in July, dropping to 1.238 million from 1.353 million in June, and Building Permits decreased to 1.396 million from a revised figure of 1.454 million. On a positive note, Monthly Retail Trade figures from the Census Bureau showed a 1% rise in July, up from 0% in June, and initial unemployment claims fell to 227,000 from 234,000. The Bureau of Labor Statistics reported an increase in the Consumer Price Index (CPI) inflation rate to 0.2% in July from -0.1% in June, although the annual CPI inflation rate slightly decreased to 2.9% from 3%. Meanwhile, the Producer Price Index (PPI) excluding Food & Energy dropped to 0% in July from June’s revised 0.3%, and the annual PPI decreased to 2.2% from the revised 2.7%.

In the Euro Area, the economic outlook remains subdued. The Eurostat reported that the GDP growth rate for Q2 was unchanged at 0.6% compared to Q1. Industrial Production in June improved marginally to -0.1% versus a revised figure of -0.9% in May. However, economic sentiment worsened significantly, with the ZEW Economic Sentiment Index for the Euro Area falling to 17.9 points in August from 43.7 in July. Germany, a key Eurozone economy, also saw a drop in ZEW Economic Sentiment to 19.2 points from 41.8, and the survey of Germany’s economic situation plunged further into negative territory at -77.3 points from -68.9.

The EURUSD exchange rate reflects these developments. Despite mixed signals from both economies, the EURUSD rose by 0.43% to 1.10253 on Friday, and for the week ending August 16, it increased by 1.02%. The rise suggests that the market is cautiously optimistic about the Euro, possibly interpreting the Euro Area’s relatively stabilized GDP figures and smaller improvements in industrial production as signs of resilience. Conversely, weaker U.S. housing data and significant drops in the PPI may be seen as indicative of slowing growth, leading traders to favor the Euro over the Dollar. However, lingering concerns about the Eurozone’s economic sentiment, as reflected in the steep drop in ZEW indices, could introduce volatility in the coming weeks.

From X (Twitter)

Euro area #GDP +0.3% in Q2 2024, +0.6% compared with Q2 2023: flash estimate from #Eurostat https://t.co/rXsEeDnDSB pic.twitter.com/JejLjc1M9b

— EU_Eurostat (@EU_Eurostat) August 14, 2024

CPI for all items rises 0.2 percent in July; shelter up https://t.co/dJyJeKlXDJ #CPI #BLSdata

— BLS-Labor Statistics (@BLS_gov) August 14, 2024

What can we expect from EURUSD for the new week and what happened on Friday?

EURUSD on Friday rose 0.43% to 1.10. Price is above 9-Day EMA while Stochastic is rising. For the week ending 2024-08-16, the pair rose 1.02% or 111.5 pips higher.

Looking ahead, EURUSD looks bullish as the pair ended higher after Friday trading session.

For the new week, our technical outlook looks bullish, immediate upside resistance level at 1.11 (WR1) with break above could target 1.11 (WR2). On the downside, we are looking at week low of 1.09 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.10 would suggest bullish bias after recent positive movement.

For the month of August, EURUSD is up by 1.86% or 201.4 pips higher.

Weekly key levels to watch out:

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New Residential Construction Source: Census Bureau
Manufacturing and Trade Inventories and Sales Source: Census Bureau
Advance Monthly Sales for Retail and Food Services Source: Census Bureau
Advance Monthly Sales for Retail and Food Services Source: Census Bureau
Business Formation Statistics Source: Census Bureau
Industrial production down by 0.1% in the euro area and unchanged in the EU Source: Eurostat
GDP up by 0.3% and employment up by 0.2% in the euro area Source: Eurostat
In July 2024, the prices of frequently purchased goods sold in hyper and supermarkets decreased by 0.2% year on year Source: INSEE
In Q2 2024, collective tourist attendance decreased by 4.0% over a year Source: INSEE
In July 2024, consumer prices increased by 0.2% over one month and by 2.3% year on year Source: INSEE
Construction of buildings indices, Civil engineering indices and miscellaneous indices for construction in June 2024 Source: INSEE
Inflation rate in July 2024 at +2.3% Source: Statistisches Bundesamt (Destatis)