EUR/USD WEEKLY OUTLOOK COME DEC 9TH- 13TH; MARKET PRICE REACHING FOR TECHNICAL RESISTANCE

FUNDAMENTAL BEAM

EUR/USD enjoyed the calm in Europe to push higher. German Trade Balance, Industrial production, as well as the ECOFIN and Eurogroup Meetings are the main highlights of this week. Here is an outlook on the major market-movers awaiting us ahead.

Last week, the ECB left policy unchanged in line with market forecast. The ECB has maintained ultra-low rates  ECB President Mario Draghi announced in the press conference that cheap money will continue to flow, and key rates will remain low for an extended period of time. The ECB even marginally upgraded its growth forecast for 2014. Will the Eurozone succeed in enjoying a real recovery? In the US, Non-Farm Payrolls exceeded expectations and seemingly enable QE tapering. However, the jury is still out.

 Summary of key events during the week

1. German Trade Balance: Monday, 7:00. Germany’s trade surplus expanded more than expected in September, reaching 20.4 billion euros ($27.4 billion) from a revised 13.3 billion euros in August. Economists anticipated a smaller rise to 17.2 billion euros. Germany’s strong exports overshadow other euro-area countries raising criticism that its surpluses hinder European and global growth. The IMF reprimanded Germany, urging Chancellor Angela Merkel’s government to limit its export surplus to an “appropriate rate” to help euro partners cut deficits.
2. Eurogroup Meetings: Monday. Eurogroup meetings held in Brussels and attended by the Eurogroup President, Finance Ministers from euro area member states, the Commissioner for economic and monetary affairs, and the President of the European Central Bank. The current meeting will not include the Greek issue since Greece has made progress in the financial sector and economic reforms but need to resolve pending issues.
3. German Industrial Production: Monday, 11:00. German industrial production plunged in September, signaling that German growth may have lost momentum in the third quarter. Production fell 0.9% following a revised 1.6% gain in August. Economists expected a small rise of 0.2%. Production advanced 1 percent from a year earlier when adjusted for working days. However, despite the fragile recovery, economists believe German economy is stable and will expand in the coming months.
4.  French Industrial Production: Tuesday, 7:45. French industrial production declined in September by 0.5%, amid a sharp drop in the automobile and refineries industries. The disappointing reading followed a 0.7% gain in August and came as a surprise to analysts expecting a 0.4% increase. Production of cars and other transport materials plunged by 3.4%, while the output of the country’s refineries fell 2.1%.
5. Italian Industrial Production: Tuesday, 9:00. Italian industrial output increased by 0.2% in September following two consecutive monthly drops but the overall reading for the third quarter was 1.0% lower than the previous quarter, marking the tenth consecutive decline. The euro zone’s third largest economy has been in recession since mid-2011. In the first nine months of the year output fell 3.9% compared with the same period in 2012.
6. ECOFIN Meetings: Tuesday. Eurozone:  The ECOFIN meetings held in Brussels and attended by Finance Ministers from EU member states. The quorum discuss a range of financial issues, such as euro support mechanisms and government finances. The current Ecofin Meeting will include the backstop arrangements that have to be established no later than ahead of the completion (November 2014) of the comprehensive assessment of EU banking institutions.
7. French Final Non-Farm Payrolls: Wednesday, 6:30. French Final Non-Farm Payrolls showed a 0.2% drop for Q2, in line with market forecasts. The first quarter Non-Farm Payrolls posted a 0.1% fall. This was the fifth consecutive quarter of declines indicating scarce job opportunities and continuing layoffs. On a yearly base, full-time employment is dropped 0.7%, but temporary work has plunged 5.0%.
8. French CPI: Thursday, 7:45. Consumer prices dropped 0.1% in October, slightly better than the 0.2% decline registered in September. Analysts expected a flat reading. Services recorded the main increase offset be a sharp drop in energy prices. Annual inflation declined from 0.9% in September to 0.6% in October, posting the lowest reading since November 2009.
9. ECB Monthly Bulletin: Thursday, 9:00. The ECB stated in its previous monthly bulletin that the Euro zone inflation may remain subdued for some time. Inflation expectations over the medium to long term remained in line with the central bank’s aim of maintaining inflation rates close to, 2%. The Bulletin was similar to the rate statement made by Draghi when he announced the rate cut of 0.25%.
10.  Industrial Production: Thursday, 10:00. Industrial production across the 17-country euro-area fell 0.5% in September, following a 1.0% gain in August, suggesting the Eurozone economic growth may have halted in the third quarter and future growth is expected to remain slow at best. The poor economic condition in the periphery heavily weighs on the Eurozone’ growth prospects
11.  Employment Change: Friday, 10:00. Workforce in the euro zone declined again in the second quarter of this year but at a slower pace, suggesting that the bloc’s modest recovery may be gaining momentum. Employment fell 0.1% in the second quarter, significantly better than in the two preceding quarters. However, the recovery remains fragile and reliant on exports. Improvements are modest and moral is slightly better, but the Eurozone is still a long way to recovery.

TECHNICAL BEAM

  

Last week on his same blog;  after analyzing EUR/USD for the week start december 2nd, we predicted much of a bullish trend for this pair following an updated Fibonacci price and pattern levels. With same respect to last week post, not much has changed for this pair as we anticipate better bullish days ahead this week.

EUD/USD now stands on the verge of confirming a technical retest of the Fibonacci technical resistance earlier predicted. Fibonacci Price target for 100% sequence number recorded at 1.3816.

NOTE: That " The Correlation between EUR/USD and GBP/USD initilly standing at between 85%-90%, now stands at between 65%-75%." This implies that one of the pair is leading and the other, lagging. Hence, in  this case, after a careful observation and analysis of live price data; i would like to announce to the general public "GBP/USD LEADS" while "EUR/USD LAGS".

Therefore, for technical analyst who wonder why EUR/USD refuse to post considerable gains- It is simply as a result of reduced percentage correlation when compared with GBPUSD. Hence, what you initally saw happen on GBP/USD would take more time to occur on EUR/USD. No wonder Britain is threatening to pull out of the Eurozone by selling their stakes. Also read up more correlation articles for better understanding of changing market trends.

NOTE: Price predictions produced by FibonacciPrice&PatternTrader may be affected by unforeseen events like hurricane, earth quake, flood and other natural disasters consequently changing price patterns already predicted. Hence we advice strict adherence to money management techniques.

HAPPY TRADING