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© British Pound Live
– EUR / USD seen in the lateral trend despite the previous rebound.
– Corner model parameters that can potentially contain prices.
– The EUR considers the Fed's decision regarding the ZEW index.
The exchange rate between the euro and the dollar is expected to start trading around 1.1072 this week, after closing the previous rate close to 0.43% higher on Friday, although studies on the charts suggest that the short-term trend will be latent.
The 4-hour chart, used to determine short-term outlooks for the coming week, shows that the pair is oscillating in a range between the lows at 1.0900 and the highs at 1.1050. This trend will likely continue unless there is a clear break between high and low values.
A break above the 1.1110 high would probably indicate a higher move to reach a target at 1.1225. Alternatively, a break below the 1.0900 level would confirm a probable continuation up to 1.0800.
Above: Euro rate per dollar indicated every 4 hours.
The daily chart shows that the exchange rate trades laterally but steadily decreases if the model falls. A continuation in the corner parameters is likely and would see the pair fall between 1.0900 and 1.1000.
As in the 4 o'clock chart, however, there is the possibility of a break in the confined range and a move towards a bullish target at 1.1250, or a break towards a bearish target at 1.0750, although it is not our basic case.
The daily chart is used to give us an indication of the medium-term outlook, defined as the week to a month ahead.
Above: Euro-dollar rate indicated daily.
The weekly chart shows that the pair could continue to sell within the confines of the wedge model. The trading range is likely to tighten as the tranche decreases to 1.08 to 1.09.
As the angles decrease, there will be more chance of a volatile escape in both directions. A higher breakout could move up to a target around 1.1280 at the 50-week moving average (MA).
Otherwise, a break down could result in a fall in the exchange rate against the target target around 1.0700. The weekly chart is used to give us an idea of the long-term outlook, which includes the next few months.
Above: Euro-dollar rate indicated weekly.
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The euro: what to watch
The main market reports regarding the euro over the coming week are the ZEW confidence index released Tuesday and the inflation released on Wednesday.
The ZEW is an influential survey conducted from interviews with professional investors. It is considered a good indicator of the evolution of the wider economy, so that it can often have an impact on the euro. The ZEW for September is expected to rise to -38 in Germany, from -44.1 previously, when it was released Tuesday at 10 am.
The figure represents the balance of responses to an optimistic and pessimistic survey, and the German and European level indicators are important for the market. An improvement in confidence, better than expected, would probably support the euro and vice versa, in case of worse deterioration than expected.
The other key publication is the CPI, although it is the second estimate of the August CPI, rather than the preliminary estimate. or "flash" more important published at the beginning of each month. Headline inflation returned to 1% this month and core inflation to 0.9%.
Global inflation and core inflation should be confirmed by this week's "definitive" figures. However, it is also possible that the figures will be revised upwards given the extent of their recent fall, a result that would be positive for the euro.
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The US dollar: what to watch
The decision of the US Federal Reserve (Fed) on interest rates and forecasts on this subject to be published Wednesday at 19 hours, London time, will be the main engine of the dollar in the coming week. Most analysts expect the Fed to lower interest rates by at least 0.25%, but perhaps more.
The current consensus forecast is a 0.25% reduction, which has already been incorporated into the dollar exchange rate. A deeper reduction of 0.50% is also possible and would weaken the dollar. US data has been positive recently, which, combined with the easing of trade tensions, has reduced the chances of a sharp reduction.
According to the market indicators of the expected rates, the probability of a reduction of 0.25% at Wednesday's meeting is 79.6% and 20.4%, the possibility of not changing. Lower interest rates tend to be negative for foreign currencies as they make the jurisdiction less attractive for foreign investors looking for a place to store their money, resulting in lower capital inflows and, in some cases , outings.
"The US central bank is expected to significantly lower the federal funds rate by 25 basis points to a target range of 1.75 to 2.00% on Wednesday. But with the cut already fully integrated, investors will be more interested in the updated economic projections and the graph in points, "said Raffi Boyadijian, analyst at XM.com. "The easing of trade tensions has led to a reduction in bets on aggressive rate hikes in recent days, but if the rate trajectory forecast by the Federal Open Market Committee (FOMC) remains well above that of the markets, Treasury bills should be sold off, leading to higher yields and, as a result, the US dollar.
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