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Forex - EUR/USD weekly outlook: May 16-20

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Forex Pros - The euro tumbled to a six-week low against the U.S. dollar last week, as uncertainty over whether Greece will need additional financial assistance and fears over the global economic recovery spurred a flight to safety.

EUR/USD 1.4065 on Friday, the pair's lowest since April 1; the pair subsequently consolidated at 1.4115 by close of trade, tumbling 1.71% over the week.

The pair is likely to find support at 1.3979, the low of March 18 and resistance at 1.4422, last Wednesday's high.

Speculation that Greece will be forced to restructure its debt pushed the nation's borrowing costs to almost record highs last week.

European Union leaders are due to meet on Monday to discuss further support for Greece, beyond the EUR110 billion bailout granted a year ago. However, leaders are awaiting the conclusions of a European and International Monetary Fund mission to Athens before making any decisions on further steps.

On Sunday, European Central Bank Executive Board member Juergen Stark said Greece had to make further savings to meet conditions for payment of the next installment of the bailout.

Stark said on Friday that restructuring Greece's sovereign debt would pose potentially incalculable risks to the overall euro zone and would not solve the country's fiscal crisis.

Meanwhile, on Friday, comments by ECB President Jean-Claude Trichet triggered some confusion. In a Spanish television interview, Trichet stated he saw a "hump" in the consumer price index, not a "peak" as Reuters originally reported, indicating that the bank could easily resume its rate hike campaign after a momentary pause.

Looking ahead, investors will be closely watching developments in the euro zone, with the single currency likely to remain under pressure until the conclusion of Monday's meeting.

Also next week the U.S. is to publish government data on housing and employment while the Federal Reserve is to publish the minutes of its most recent policy meeting.

Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.

Monday, May 16

The euro zone is to publish official data on consumer price inflation, which accounts for a majority of overall inflation.

Later in the day, Federal Reserve Chairman Ben Bernanke is to speak; his comments will be closely watched for any clues to the possible future direction of monetary policy. The U.S. is also to publish government data on the balance of domestic and foreign investment as well as data on manufacturing activity in New York state.

Tuesday, May 17

In the euro zone, the ZEW Centre for Economic Research is to publish a report on German economic sentiment, a leading indicator of economic health.

The U.S. is to publish official data on building permits, an excellent gauge of future construction activity as well as data on housing starts, a leading indicator of economic health. The country is also to publish government reports on the capacity utilization rate and industrial production.

Wednesday, May 18

The Federal Reserve is to publish the minutes of its most recent policy meeting. The minutes give in-depth insights into the economic conditions that influenced the decision on where to set interest rates. The U.S. is also to publish government data on crude oil stockpiles.

Thursday, May 19

The U.S. is to publish its weekly report on initial jobless claims as well as industry data on existing home sales and official data on manufacturing activity in Philadelphia.

Friday, May 20

The euro zone is to round up the week with data on German producer price inflation, a leading indicator of consumer inflation as well as report on the current account of the 17-nation currency bloc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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