Euro To Dollar Exchange Rate Forecasts March 2020: 18 Currency Analysts’ EUR/USD Technical Outlook, Opinion And Predictions – Exchange Rates UK

The Euro US Dollar exchange rate is hovering around $1.11434 (-0.01%) on Monday March 3, ahead of the European trading session.

Technically, Erik Bregar, currency analyst at the Exchange Bank of Canada, thinks “the market could be rip for a short term pullback, the result of which would create a new trading range now albeit higher now…lets call it 1.1000-1.1160.”

Exchange Rates UK Research team have compiled a roundup of expert FX views on the current EUR/USD outlook from eighteen leading FX analysts.

Eighteen Currency Analyst Views and Opinion on Euro Near to Medium-Term Outlook

Shaun Osborne, Chief FX Strategist at Scotiabank

“EUR/USD short-term technicals are neutral/bullish – the EUR hit its highest mark in over five weeks as it targets a firm and sustained breach above the 1.11 mark continuing a steep (and nearly uninterrupted) rally from its year-to-date low of 1.0778 just seven sessions ago. Today’s move has seen the EUR blast past its 40-, 100- and 200-DMA to trade above all three marks for the first time since midJan. While the EUR stubbornly traded in oversold territory for around a ten-day stretch in mid-Feb it is now quickly racing toward trading in overbought territory. We think the EUR should start to lose momentum above the 1.11 mark with the ~1.1150 area acting as resistance following an intermediate ceiling at ~1.1120. Support is 1.1080/90.”

Erik Bregar, Exchange Bank of Canada

“Euro/dollar surged higher to chart resistance in the 1.1150s overnight as global bond markets now demand immediate rate cuts from the Fed. Fridays intra-day hesitation at the 1.1000 level proved short lived after the market closed NY trade firmly above it, and with that traders had another positive technical development to latch on to at the start of Asian trade last night. Weve rallied over 250pts now however since EURUSD ended its downtrend with a break above the 1.0880-1.0900s last week, and we feel as if the market has now probably flushed out all the new fund shorts that entered during the first three weeks of February (Fridays COT report showed the fund net short EURUSD positioning extending to a new 3-year high as of February 25th). With that, we think the market could be rip for a short term pullback, the result of which would create a new trading range nowalbeit higher now…lets call it 1.1000-1.1160.”

Mary McNamara, Market Analyst at ACY Securities

“EUR/USD: there has been a descending wedge brewing on this pair for many months and there have already been a couple of false breakouts. Is this a case of third time lucky though? The FX Indices both printed weekly chart reversal patterns so I think it might pay to keep an open mind especially, as noted above, if the US Central Bank follows through with any Coronavirus-related intervention. “

Robin Wilkin, Global Cross Asset Strategy at Lloyds Commercial Banking

“Prices continue to extend the rebound from the ~1.0780 lows, now approaching resistance in the 1.1090-1.1160 region. Momentum studies and Elliott Wave structures would suggest that the upside should be limited to this region and another pullback will develop. Support on that move lies currently in the 1.1000-1.0950 region. However, we will be watching to see if pullbacks remain corrective in nature for a test above 1.1160 and 1.1240 in the future, or we just head back to channel support..”

Mohammed Isah, FXTechstrategy.com

“EURUSD faces risk of further move higher following its past week rally. Resistance comes in at the 1.1050 where a break will turn risk to the 1.1100 level. A breach below here will target the 1.1150 level. Further up, resistance stands at the 1.1200. Conversely, on the downside, support comes in at 1.1000 level with a violation of there opening the door for further gain towards the 1.0950 level. Further down, resistance lies at the 1.0900 level. A cut through that level will clear the way for a move towards the 1.0850 level. All in all, EURUSD looks for more recovery higher.”

FX Analyst at Credit Suisse

“EURUSD has been floored as expected by the long-term potential uptrend from 2000 at 1.0778/51 and although the market remains in a clear medium term downtrend, we think the risks are likely that we see a reversal back higher within the shallow downtrend, very much in line with the previous immediately reversed breakdowns that we have seen during this shallow downtrend. In contrast, a move below 1.0751 would suggest the medium term downtrend is accelerating, with the next support on a break below 1.0778/51 seen at 1.0682, a corrective price low, before a more prominent price low at 1.0569.”

Anton Kolhanov, Kolhanov.com

“The uptrend may be expected to continue, while pair is trading above support level 1.0940, which will be followed by reaching resistance level 1.1087 and 1.1170. A downtrend will start as soon, as the pair drops below support level 1.0940, which will be followed by moving down to support level 1.0829.”

Dr Jörg Krämer, Chief Economist at Commerzbank

“Low FX volatility has made carry trades more attractive. This is negative for EUR because of its interest rate disadvantage with USD. EUR/USD is likely to remain under pressure for some time.”

Avery Shenfeld, CIBC

“Safe-haven assets have been on a tear lately, in the wake of widespread concern about the novel coronavirus. The US dollar in particular has caught a bid over the past five weeks, up more than 5% against some majors. But how big are these moves? Looking back to the financial crisis, it’s clear that the latest run of dollar buying pales in comparison. While the financial crisis was born in the US, it didn’t stop capital from piling into safe dollar-based assets in the wake of Lehman Brothers. As a result, the risks today appears to be toward more near-term dollar-strength, even if the virus reaches America in a meaningful way.”

Chris Turner, ING

“EUR/USD is rallying on the back of broad-based de-leveraging. Recall that the EUR had become a popular funding currency and we’ve recently seen huge unwinds of popular carry trades in high yield EM currencies, such as RUB, ZAR and MXN. The ECB will be in no mood to jump in with a pre-emptive rate cuts, but could be forced to act were equities to continue to fall hard. Here the market looks like it is pricing a 10bp ECB rate cut over coming months. It is still not clear the ECB would go with a rate cut – e.g. an increase in the tiering of deposits is another option – but we hear little from the ECB ahead of the 12 March meeting. The first look at February CPI and retail sales are the key Eurozone releases in the week ahead. Despite some better activity data in January, the fear is that Covid-19 will hit Europe hard in 1H20 and that is why we view the current EUR/USD rally as short-term and corrective in nature.”

Christin Tuxen, Head of FX Research, Chief Analyst at Danske Bank

“For EUR/USD, we are seeing an illustration of why paralysed central banks mix up the relative-rates channel in FX: we believe the ECB is unlikely to cut as a virus response (EUR positive given pricing), while the Fed might soon be ripe to give in (USD negative as this is likely to spark hopes of more). While the Fed is now priced for a full cut in April (our base case), pricing could easily become more aggressive, if the risk of the tail increases. Thus, we could see EUR/USD testing 1.11 near term.”

John Hardy, Head of FX Strategy, Saxo Bank Group

“The euro move continues and EUR/USD may not find meaningful resistance until at least 1.1200 if the negative market energy continues. Regardless, the EURUSD chart has turned and the chief question for bulls now will be the magnitude of any backfills lower if any relief rally in risk appetite appears, for example on a surprise Fed move or other.”

Kathy Lien, BK Asset Management

“The best performing currency was the euro which rose nearly 1% against the US dollar. The currency pair benefitted from stronger Eurozone confidence numbers and a downward revision to the personal consumption component of US Q4 GDP. It is difficult to foresee the rally in EUR/USD continuing with the virus spreading quickly across Europe. The German and Italian economies were faltering before we even heard about the words coronavirus and with the outbreak hitting the industrial heartland of Italy, 2020 could be another ugly year for Europe. Italy was one of the weakest European economies in 2019 while Germany barely avoided recession. For all of these reasons, we expect the rally in EUR/USD to hit a brick wall quickly.”

Sal Guatieri, Director and Senior Economist at BMO

“We now assume that at least a modest outbreak of the virus will occur on this side of the pond. The number of new cases outside of China is on the rise, forcing some countries to shut down factories—that will help contain the spread of the virus but also disrupt the global supply chain that greases U.S. production. The tourism industry faces a deeper chill as businesses shelve travel plans and people stay home. And, despite lower interest rates, financial conditions won’t remain supportive if equities continue to buckle, credit spreads widen further, and the U.S. dollar keeps rising. A recent improvement in U.S. labour productivity could reverse as businesses will likely try to avoid lay-offs given the assumed temporary impact on demand.”

Martin Enlund, Nordea

“Haven demand has been the general trend in the FX space as well. The USD ought to be faring well from a relative macro point of view as the news flow has been worse out of the Euro area. Moreover, going by the latest and official virus numbers, the situation in China is improving from a weak level while Europe is getting worse. Despite this, EUR/USD has been moving higher. We think the main driver of this EUR strength is unwind of EUR funded EM carry trades. EUR/USD looks nicely and inversely correlated with the S&P500 future for now.”

Jane Foley, Rabobank

“The USD was spooked yesterday [27.02.2020] by the news that the US Centres for Disease Control and Prevention reported a new case of COVID-19 in California which could represent the first US case spreading within the general population. The related concerns have taken some of the steam out of the USD’s recent gains. However, it remains the case the EUR is also blighted by coronavirus concerns.”

Marc-André Fongern, Head of FX Research & Keynote Speaker at Fongern Global Forex

“Fiscal stimulus becomes the pivotal issue. Inevitably, the German government has hardly any other option but to lend a helping hand to the economy, as the consequences of the virus, particularly for the industrial sector, are likely to be clearly evident over the next few months.”

Richard Perry, Hantec Markets

“The euro was already engaging a technical recovery, but the gains seen in yesterday’s session would have surprised even the more positive of traders. Adding +118 pips on the session was the biggest one day rise on EUR/USD since January 2019. The technical rally accelerated through key resistance at $1.0980 and also broke an eight week downtrend. With RSI into the high-50s, MACD and Stochastics accelerating higher, the bulls are in control, for now.

“However, we would caution backing against the dollar for too long here. The sell-off on the dollar is similar to the sell-off on the yen last week, a move which quickly unwound. We have been seeing a technical rally on EUR/USD as counter-trend and a move which is likely to be short term in duration. The move has gone further than we anticipated, but technically, the outlook is still corrective on a medium term basis.

“Old resistance is at $1.1065/$1.1100 with falling moving averages overhead. A move above $1.1100 which is a lower high, would change the outlook, but this is still likely to be a short term rebound that hits the buffers once more. Initial support at $1.0965.”

At the start of the week, the Euro US Dollar (EUR/USD) exchange rate edged lower, with the pairing dropping back towards $1.08 due to the spread of coronavirus.

The rapid spread of Covid-19 pushed traders towards the safe-haven Dollar as investors feared the outbreak could become a pandemic as South Korea, Italy and Iran battled with outbreaks.

USD benefitted as many analysts viewed the American economy as being well-shielded from the Covid-19 outbreak.

The pairing remained largely flat on Tuesday after data revealed the German economy stagnated in the final three months of 2019. Shrinking exports weighed on economic activity and the data confirmed the bloc’s largest economy had been struggling before the outbreak of coronavirus.

Meanwhile, the ‘Greenback’ remained under pressure as traders now expect an interest rate cut from the Federal Reserve. A cut would relieve any pressure put on the country’s economy caused by the outbreak of Covid-19.

The pairing edged up slightly after a US official from the US Centers for Disease Control and Prevention (CDC) said that the country needed to prepare for the virus to spread within the USA.

The single currency made some gains despite Italy reporting more than 300 cases and 11 deaths from the virus.

Thursday saw the EUR/USD exchange rate rise after the Eurozone’s business was better than expected in February.

Meanwhile, the US reported a coronavirus infection of unknown origin, and the CDC warned of the possibility of community spread.

Many feared other countries would face similar issues as China, which saw its economy paralyzed by the efforts made to contain the outbreak.

On Friday, EUR/USD volatility jumped to the highest in more than a year, due to growing fears about the Covid-19 outbreak. The increased fears saw recession fears increase and this fuelled large currency movements.

Marc-André Fongern, head of FX research at Fongern Global Forex said:

‘The virus has turned the markets upside down. Stocks are collapsing, while for the foreseeable future, abysmally poor economic figures are likely to be the rule rather than the exception. Consequently, the Japanese Yen remains the preferred currency.’

Looking Ahead

Looking ahead, the Euro (EUR) could edge higher against the US Dollar (USD) following the release of German manufacturing data.

If Markit reveals the German manufacturing PMI has edged higher in February, the single currency will edge higher.

Meanwhile, the pairing could slump on Monday afternoon following the release of the US Federal Reserve’s preferred measure of manufacturing PMI.

If the ISM manufacturing PMI rises higher than expected, the ‘Greenback’ will edge higher.

Tuesday could see the pairing extend losses if February’s flash Eurozone Consumer Price Index (CPI) disappoints.

Meanwhile, the single currency could make some gains if German retail sales rebound in January and the country’s Markit PMI composite remains firmly in growth territory.

February’s US ISM non-manufacturing PMI could dampen Dollar sentiment if the figure comes in below expectations, showing the rate of growth has slowed.

Friday could see the US Dollar make further gains against the Euro following the release of February’s non-farm payrolls data.

If the US adds more jobs than expected to its economy, the Euro to US Dollar (EUR/USD) exchange rate will slump at the end of the week.