EURUSD on Friday dropped -0.35% to 1.10465. Week ending 2024-08-30 moved lower by -1.26%. End of August rose 2.06%. What you need to know.

EURUSD Analysis

Performance
Period	Pct	Chg	Momentum
Friday	-0.35%	-38.7 Pips
Week 2024-08-30	-1.26%	-141.4 Pips
August	2.06%	222.6 Pips

Upcoming key events for the new week (London Time)

Mon 06:00 AM Labor Day
Thu 01:30 PM Initial Unemployment Insurance Claims
Fri 10:00 AM GDP (seasonally adjusted) (3-mth)
Fri 10:00 AM GDP (seasonally adjusted) (12-mth)
Fri 01:30 PM Nonfarm Payroll Employment

What happened over the week

In the United States, the economic indicators reveal mixed outcomes. The Michigan Index of Consumer Sentiment in August slightly rose to 67.9 points from 67.8 points in July, showing stable consumer optimism (University of Michigan). The University of Michigan also reported the 5-year Consumer Inflation Expectation remained at 3%, indicating consistent inflation expectations. The PCE Price Index for July saw a marginal increase to 0.2% from 0.1% in June, and excluding food and energy, it remained at 0.2% (Bureau of Economic Analysis). Personal income grew by 0.3%, up from 0.2% in June, while consumer spending (PCE) accelerated to 0.5% from 0.3%. The annual PCE Price Index held steady at 2.5%. Initial Unemployment Insurance Claims for the week ending 24 August fell to 231K. The flash estimate for Q2 GDP annual growth rose to 3%, reflecting a rebounding economy (Bureau of Economic Analysis).

In the Euro Area, consumer prices and economic sentiments signal mild fluctuations. The core Harmonized Index of Consumer Prices (HICP) for August showed a 0.3% increase from -0.2% in July, while the 12-month flash estimate slightly declined to 2.8% from 2.9% in July (Eurostat). The overall HICP dropped to 2.2% from 2.6%. The unemployment rate improved to 6.4% in July from 6.5% in June. The Economic Sentiment Indicator (ESI) edged up to 96.6 points from 95.8 in July, despite consumer confidence dipping to -13.5 from -13.4 (DG ECFIN). The Business Climate Index fell marginally to -0.62 from -0.61 (European Commission). Germany also mirrored mixed indicators. Unemployment remained unchanged at 6%, but the unemployment change significantly reduced to 2K from 18K. The CPI inflation rate and HICP for August both fell, signaling lower inflation pressure (Destatis). However, the GfK Consumer Confidence Survey showed a decline to -22 in September from -18.6 in August (GfK).

The recent economic events suggest that EURUSD dynamics could be influenced by divergent economic indicators from both the United States and the Euro Area. The U.S. economic indicators reflect robust personal income and spending growth, along with stable inflation, factors which strengthen the USD. Conversely, mixed signals from the Euro Area, including higher unemployment and softer inflation data, could weaken the EUR. The EURUSD exchange rate, which has already dropped by -0.35% to 1.10465, may see further volatility based on upcoming key economic events such as the Euro Area GDP and U.S. Nonfarm Payroll Employment reports. The divergence in economic performance between these major economies may lead to a stronger USD relative to the EUR in the near term.

From X (Twitter)

Euro area #inflation expected to be 2.2% in August 2024, down from 2.6% in July. Components: services +4.2%, food, alcohol & tobacco +2.4%, other goods +0.4%, energy -3.0% – flash estimate https://t.co/Sk1SPtBU6b pic.twitter.com/WtROodAv4n

— EU_Eurostat (@EU_Eurostat) August 30, 2024

People’s incomes rose 0.3% in July; spending grew 0.5%. Both figures are in current dollars.https://t.co/eDZgP9dcXM

— BEA News (@BEA_News) August 30, 2024

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

EURUSD on Friday dropped -0.35% to 1.10. Price is below 9-Day EMA while Stochastic is falling. For the week ending 2024-08-30, the pair dropped -1.26% or -141.4 pips lower.

Looking ahead, EURUSD looks bearish as the pair posted lower in Friday trading session.

For the new week, our technical outlook looks bearish, immediate support level is at 1.10 (WS1) with break below could see further selling pressure towards 1.10 (WS2). For potential buyers, as the current momentum is bearish, we prefer to look at firm break of the week high of 1.12 as an important indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below week low of 1.10 would indicate selling pressure.

For the month of August, EURUSD is up by 2.06% or 222.6 pips higher.

Weekly key levels to watch out:

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In June 2024, sales volume in trade decreased again (‑0.7%) Source: INSEE
In Q2 2024, GDP increased (+0.2%) and household purchasing power rose (+0.2% per consumption unit) Source: INSEE
Household consumption of goods rebounded slightly in July 2024 (+0.3%) Source: INSEE
In August 2024, consumer prices increased by 1.9% year on year Source: INSEE
In Q2 2024, payroll employment was stable Source: INSEE
Inflation rate in August 2024 expected to be +1.9% Source: Statistisches Bundesamt (Destatis)
Gross Domestic Product (Second Estimate), Corporate Profits (Preliminary Estimate), Second Quarter 2024 Source: Bureau of Economic Analysis
Advance Retail Inventories Source: Census Bureau
Advance U.S. International Trade in Goods Source: Census Bureau
Advance Wholesale Inventories Source: Census Bureau
Quarterly Financial Report – Retail Source: Census Bureau
In August 2024, household confidence has slightly recovered Source: INSEE
Minutes of the Board’s discount rate meetings on July 22 and July 31, 2024 Source: Federal Reserve
Gross domestic product: Detailed results on economic output in the 2nd quarter of 2024 Source: Statistisches Bundesamt (Destatis)
Advance Monthly Manufacturers’ Shipments, Inventories, and Orders Source: Census Bureau
Philip R. Lane: The effectiveness and transmission of monetary policy in the euro area Source: European Central Bank