Forex - EUR/USD Weekly Outlook: August 22 - 26

Forexpros – The euro ended higher against the U.S. dollar last week, as the European Central Bank continued buying government bonds but the single currency pared gains on Friday amid concerns that the sovereign debt crisis was spreading to the region’s banking system.

EUR/USD hit 1.4516 on Wednesday, the pair’s highest since July 27; the pair subsequently consolidated at 1.4394 by close of trade on Friday, gaining 0.88% over the week.

The pair is likely to find support at 1.4258, Friday’s low and resistance at 1.4516, Wednesday’s high.

The euro remained supported against the dollar as the ECB continued buying government bonds to keep the region’s sovereign debt crisis from spreading, while European Union officials stepped up efforts to deal with the debt crisis.

On Tuesday, German Chancellor Angela Merkel and French President Nicolas Sarkozy proposed tighter policy coordination between euro zone member states, in an attempt to reassure markets about the cohesion and survival of the single currency bloc.

But the shared currency trimmed gains on Friday, as global equities markets declined amid concerns over funding issues faced by some large European banks. 

Sentiment was further hit by worries that Europe's latest bailout for Greece was in danger of collapsing over whether countries that have pledged to provide aid should receive cash collateral.

The European Commission on Friday urged euro zone members to resolve the issue quickly or risk disrupting the bloc's bailout efforts.

In the week ahead, investors will be focusing on whether Federal Reserve Chairman Ben Bernanke will drop any hints about such further monetary easing measures when he speaks at an economic symposium in Jackson Hole, Wyoming, on Friday.

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

Monday, August 22

The U.S. is to publish data on mortgage delinquencies, a sign of health in the housing market.

Tuesday, August 23

The euro zone is to produce preliminary data on activity in the manufacturing and services sectors, while France and Germany are to publish individual reports. Meanwhile, the ZEW Centre for Economic Research is to release a report on German business confidence, a leading indicator of economic health.

Also Tuesday, the U.S. is to release official data on new home sales, a leading indicator of economic health.

Wednesday, August 24

The euro zone is to produce official data on industrial new orders, a leading indicator of production, while the Ifo Institute for Economic Research is to release a report on German business climate, a leading indicator of economic health.

Later Wednesday, the U.S. is to publish government data on durable goods orders, a leading indicator of production. The country is also to publish data on crude oil inventories.

Thursday, August 25

The euro zone is to publish a report on Gfk German consumer climate, an important indicator of economic health. Elsewhere, Switzerland is to produce official data on the employment level, while the ZEW Centre for Economic Research is to release a report on Swiss economic expectations.

Later in the day, the U.S. is to publish government data on initial jobless claims, a leading indicator of economic health. Meanwhile, the Federal Reserve’s annual economic symposium in Jackson Hole, Wyoming is to begin.

Friday, August 26

The euro zone is to publish data on M3 money supply.

The U.S. is to publish preliminary data on GDP, gross domestic product, the broadest measure of economic activity and the primary gauge of the economy's health. In addition, the University of Michigan is to release revised data on consumer sentiment and inflation expectations.

Meanwhile, Fed Chair Ben Bernanke is to speak at the second day of the economic symposium in Jackson Hole.




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