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EUR/USD heads for lowest weekly close since June 2017

  • EUR/USD off weekly lows but still down for the week. 
  • ECB announced the end of the purchase program on Thursday and next week the Fed is expected to raise rates. 

The EUR/USD pair dropped sharply on Friday, breaking below 1.1300 and bottomed at 1.2666, the lowest in two weeks. Late during the US session, the greenback lost strength and rose back to the 1.1300 area. 

Despite rising back to 1.1300, the euro still heads for the lowest weekly close since June 2017. During the week, it failed to hold on top of the 20-day moving average at 1.1350/60 and on Friday, weakened significantly, affected by EZ economic data and a stronger US dollar. 

The pair dropped to the next strong support at 1.1260/70 that capped the downside. Still, the pressure is biased to the downside, but eased late on Friday. The bounce on top of 1.1300 could sign more consolidation ahead, between 1.1300 and 1.1400. 

Week ahead 

On Thursday, the European Central Bank kept rates unchanged as expected and announced the end of the asset purchase program. The short-term inflation and growth outlook was dovish and pressured the euro modestly to the downside. 

Next week, on Wednesday, the Fed is expected to announce a rate hike of 25bp. “The big question is what the Fed will signal going forward, as many have interpreted recent Fed speeches by Powell and Clarida dovishly. While the Fed will probably highlight that risks to the rate outlook are becoming more two-sided, as we approach the range of the neutral rate (2.5-3.0%) estimates according to the individual FOMC members, do not be surprised if the Fed removes the sentence that it ‘expects further gradual increases in the target range’,” said analysts at Danske Bank. 

Regarding data, inflation numbers are due in the Eurozone and in the US housing data and another estimate of Q3 GDP. 

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