EURUSD on Friday dropped -0.01% to 1.11617. Week ending 2024-09-20 rose 0.66%. What’s going on.

EURUSD Analysis

Performance
Period	Pct	Chg	Momentum
Friday	-0.01%	-1.5 Pips
Week 2024-09-20	0.66%	73.3 Pips	September	0.73%	81.3 Pips

Upcoming key events for the new week (London Time)

Thu 01:30 PM Initial Unemployment Insurance Claims
Thu 01:30 PM GDP annual rate
Thu 02:20 PM Federal Reserve Chair Jerome Powell speech
Fri 01:30 PM PCE Price Index, excluding food and energy (12-mth)

What happened over the week

In the Euro Area, consumer confidence improved slightly, with the Consumer Confidence Indicator rising to -12.9 points in September from -13.5 points in August according to DG ECFIN. However, inflation metrics showed stagnation and minimal growth, with the Core Harmonized Index of Consumer Prices (HICP) remaining steady at 0.3% monthly and 2.8% yearly in August per Eurostat. The Harmonized Index of Consumer Prices (1-month) saw a marginal decrease to 0.1% in August from 0.2% in July. The sentiment regarding economic outlook weakened significantly, with the ZEW Survey Economic Sentiment dropping to 9.3 points in September from 17.9 in August, as reported by ZEW.

In Germany, the Producer Price Index (PPI) for August displayed no change, remaining at -0.8% annually and 0.2% monthly compared to July, according to the Federal Statistical Office (Destatis). German economic sentiment also took a hit; the ZEW Indicator of Economic Sentiment fell drastically to 3.6 points in September from 19.2 in August, and the ZEW Survey for the Economic Situation further deteriorated to -84.5 points in September from -77.3 points in August.

In the United States, several economic indicators showed improvement. The Manufacturing Business Outlook Survey for September rose significantly to 1.7 points from -7 points in August, per the Philadelphia Fed. Initial Unemployment Insurance Claims for the week ending September 14 declined to 219K from the revised figure of 231K, based on data from the Department of Labor. Housing market indicators were positive, with Building Permits increasing to 1.475 million in August from a revised 1.406 million in July, and Housing Starts also rose to 1.356 million from 1.237 million, according to the Census Bureau. However, the Federal Reserve lowered its interest rate projections and the Federal Funds Rate fell to 5% from 5.5%, with the new interest rate projection at 4.4% compared to the previous rate of 5.1%.

The developments reported have mixed implications for the EURUSD currency pair. The slight improvement in Euro Area consumer confidence could support the Euro marginally; however, stagnant inflation and declining economic sentiment are likely to exert downward pressure. Meanwhile, the relatively strong U.S. economic data—such as improved business outlook, lower unemployment claims, and robust housing market indicators—could bolster the USD. Yet, the Fed’s decision to lower interest rates might weaken the USD’s support. Overall, based on the mixed signals from both economies, EURUSD may experience volatility but remain in a relatively stable range until more definitive economic data is released. Upcoming high-impact events like the U.S. GDP annual rate and Federal Reserve Chair Jerome Powell’s speech are likely to be key drivers for any significant movements in the pair.

From X (Twitter)

Euro area annual #inflation at 2.2% in August 2024 https://t.co/pfx1CxDhIt pic.twitter.com/WKyaY9aKbL

— EU_Eurostat (@EU_Eurostat) September 18, 2024

Read Chair Powell's full opening statement from the #FOMC press conference (PDF) (1/2): https://t.co/QI1X4iJk56 pic.twitter.com/iLBwK7gbPG

— Federal Reserve (@federalreserve) September 18, 2024

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

EURUSD on Friday dropped -0.01% to 1.12. Price is above 9-Day EMA while Stochastic is falling. For the week ending 2024-09-20, the pair rose 0.66% or 73.3 pips higher.

Looking ahead, EURUSD looks mixed as the pair is likely to consolidate above week low of 1.11.

For the new week, our technical outlook looks bullish, immediate upside resistance level at 1.12 (WR1) with break above could target 1.12 (WR2). On the downside, we are looking at week low of 1.11 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.12 would suggest bullish bias after recent positive movement.

For the month of September, EURUSD is up by 0.73% or 81.3 pips higher.

Weekly key levels to watch out:

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In September 2024, the business climate is stable in services Source: INSEE
In August 2024, business births remain significant, despite three months of slowdown Source: INSEE
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U.S. International Transactions, 2nd Quarter 2024 Source: Bureau of Economic Analysis
Production in construction remained stable in the euro area and up by 0.2% in the EU Source: Eurostat
Annual inflation down to 2.2% in the euro area Source: Eurostat
Federal Reserve Board and Federal Open Market Committee release economic projections from the September 17-18 FOMC meeting Source: Federal Reserve
Federal Reserve issues FOMC statement Source: Federal Reserve
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
Between April and July 2024, rents increased by 0.2% Source: INSEE
Annual increase in labour costs at 4.7% in euro area Source: Eurostat
Euro area international trade in goods surplus €21.2 bn Source: Eurostat