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EUR/USD forecast for the week of August 7

The EUR/USD pair initially tried to rally during the week but Friday was a very negative. This was due to the stronger than anticipated jobs number coming out of the United States, and by forming a shooting star, looks likely that we will pullback this week. However, I would anticipate that the 1.15 level underneath should be supportive so shorter-term selling should be possible, but longer-term I think that the market should continue to reach to the upside. I think that the 1.15 level will attract a lot of attention, so it’ll be very important for the market to hold that level. If it does not, that could be very negative.

EUR/USD: Enough For Now But Risk Of Testing 1.20 Persists; Where To Target?

The move up in EUR/USD from the low 1.16s to above 1.18 in the past fortnight (high of 1.1910 on August 2nd) has taken it though the 38.2% retracement level of the entire May 2014-january 2017 downtrend from 1.40 to 1.0340.

While USD weakness is obviously a big part of the story, the Euro has been the best performing major currency during the run-up of the last two weeks.

Having raised our forecast for EUR/USD at end-Q3 to 1.17 from 1.12 just a month ago, we aren’t inclined to lift it further at this stage.

Yet we have to acknowledging the risk we could well print above 1.20 in the coming few weeks, in particular if the USD takes another leg lower (encompassing a clean break of the 92.0 DXY level). The 50% retracement level of the aforementioned move down comes in at 1.2167.

That said, we continue to look for a USD correction into year-end to bring EUR/USD at least modestly lower (current forecast is 1.15), pending a bigger up-move in 2018. In this respect note that aggregate net speculative IMM futures positioning is now close to historical extremes

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EUR/USD Rallies Above Trendline Resistance

Similar to Wednesday, a strong bid in the North American session has wiped out early day losses. The currency pair trades relatively unchanged for the day as of the European close but an upside break of a declining trendline suggests potential for further gains.

On Wednesday, EUR/USD printed a doji pattern on a daily chart to signal exhaustion following a roughly 200 pip decline from last week’s high. The pair held above support from the 2015 high at 17.14 on a 4-hour chart.

EUR/USD forecast for the week of August 14, 2017

The EUR/USD pair initially fell during the week but found enough support near the 1.17 level to turn around and form a hammer. Because of this, the market looks as if it is going to try to continue to the upside, perhaps reaching towards the 1.20 level. That’s an area that has a significant amount of psychological importance, and I think it makes a juicy target for traders. Alternately, if we break down below the 1.17 level, the market probably goes down to the 1.15 handle. At that area, I would expect to see a significant amount of support, and I do believe that the upside will continue to be the way going forward but the fact that we have a shooting star followed by a hammer tells me that more than likely in the short term we will see choppiness and essentially sideways action. That makes sense, we are in the height of vacation season for most traders around the world, and that of course affects the overall liquidity of the market.

Eurozone Second Quarter GDP Growth Confirmed At 0.6%

According to the flash Eurozone release, GDP increased 0.6% for the second quarter which matched the preliminary estimate and was in line with consensus forecasts.

The year-on-year growth rate increased to 2.2% from 1.9% the previous quarter and was slightly above the 2.1% reported in the preliminary data.

EUR/USD forecast for the week of August 21

The EUR/USD pair fell during a large portion of the week, but ended up rallying enough to form a supportive looking hammer which mirrors the hammer from the previous week. However, the week before that was a shooting star so the question is now who will win this next argument. I believe that longer-term traders will probably need to see an impulsive move in one direction or the other to make a decision. However, I’m not looking to sell from the longer-term regardless. A decision being made for me would be a breakdown of the lows from this week, telling me it’s probably best to look for buying opportunities at the 1.15 handle. Alternately, and impulsive bullish candle should send buyers into this market looking for the 1.20 level. Overall, I believe in the uptrend and don’t wish to fight it until we are well below the 1.14 handle.

GBP: Investors Unlikely To Have Any Appetite To Long GBP Ahead Of Key Events

Politics, more than data, matter for GBP especially with a heavy Brexit calendar through to year-end.

Mmarkets are unprepared and vol looks cheap given that major GBP moves this year have been driven by Brexit news rather than data. IMM positioning is close to neutral in GBP.

We doubt investors have any appetite to take on long positioning ahead of key events. Potential for heightened Euro-sceptic noise around the Conservative Party conference is a particular risk.

Tthe political and seasonal headwinds are likely to intensify,

In line with view, BofAML recommends selling GBP/USD via options into year-end.

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