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Euro price forecast 15 April 2021

2021-04-15

2021-04-15

Euro will do the job by proxy. Forecast as of 15.04.2021Dmitri Demidenko

If everything is bad in Europe, and the US situation is much better, why the [EURUSD][1] is rising in price? If the financial markets feature the same response to the US strong retail sales data as they did after the US jobs report, the euro could well grow higher. Let us discuss the Forex outlook and make up a trading plan.

Fundamental euro forecast today

The idea to buy the euro amid the potential acceleration of vaccinations and the euro area’s economic recovery due to US and Chinese imports looks good. However, the EU governments must make an effort to support the economic rebound. According to the IMF, the EU countries should increase government spending by another 3% of GDP to reduce the pandemic’s economic fallout. If you want something to be done well, do it yourself.

The International Monetary Fund predicts that the euro-area economy will recover more slowly than its major trading partners due to vaccine rollout problems, extended lockdowns, and less significant fiscal stimulus than in the United States. This position seems to be shared by the leading economic institutions in Germany. Reuters source, familiar with the matter, claims they will cut their estimates of German GDP growth in 2021 from 4.7% to 3.7% due to more extended isolation than previously thought. The government focuses on the experts’ forecasts. In January, official Berlin expected economic growth of 3%.

If everything is so bad in Europe, but in the United States, on the contrary, everything is good, why is [EURUSD][1] growing? This is the nature of the market! Investors are used to buying the rumor. The worse the forecasts are, the more chances of exceeding them are. Conversely, high estimates of GDP growth may already be priced. In this regard, the release of US retail sales data could be the same story as the most recent US labor market report. Strong statistics pushed the [S&P 500][2] up, pressing down Treasury yields and weakening the greenback.

According to Bloomberg experts, the U.S. retail sales probably surged by 5.8% M-o-M in March after a 3% decline in February thanks to faster hiring, the distribution of federal stimulus checks, a steady pace of Covid-19 vaccinations, and fewer restrictions on stores across the country. BofA Merrill Lynch expects an 11.5% gain.

Dynamics of US retail sales

Source : Bloomberg

Will the financial markets react in the same way as they did following the US jobs report? The answer to this question is crucial. A positive response will allow buying the [EURUSD][1] right away. Furthermore, it will provide further evidence that the euro area still counts on foreign support. And there are two sources of support – the USA and China. China’s GDP report is as important for the euro as the US retail sales data.

China’s economy is expected to expand by a whopping 18.5% in the first quarter, the best growth in its 30-year record-keeping history. However, one should not be misled. The reason is the low calculation base of last year when the GDP sank by almost 7%. Compared to the fourth quarter, the economic growth rate is likely to slow down from 2.6% to 1.4%.

[EURUSD][1] trading plan today

Tasks need to be solved as they come. If the [EURUSD][1] bulls fail to consolidate above 1.2 amid strong US retail sales data, it will signal their weakness. In this case, the pair is likely to roll back to the consolidation range of 1.185-1.2. Conversely, if the euro breaks out the above-mentioned level, it should reach the targets at $1.204 and $1.208.

Price chart of EURUSD in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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  1. my.liteforex.com/trading/chart?symbol=EURUSD&returnUrl=true
  2. my.liteforex.com/trading/chart?symbol=SPX&returnUrl=true