- A pleasant surprise for bulls, as German data beats expectations.
- Dollar weakness is expected to make Euro futures more expensive.
- A weaker Euro is a concern for the ECB.
Euro futures (6E) price was up Monday morning after the German Ifo Business Climate Index was released. Investors had expected the value to be lower than the previous 91.9 at 91.4. It was, therefore, a pleasant surprise for everyone when the value came in much higher than expected at 93.0. This news is bullish for the Euro as it shows higher confidence by the businesses in the German economy.
The upbeat data pushed the Euro futures up as well. The price broke above the 1.0600 level. If the price can close above 1.06500 at the end of the day, we could see a bullish reversal on the 4-hour chart.
If the weakness experienced by the dollar last week continues, we could see Euro futures prices ticking higher. As the dollar loses its value, companies hedging against volatile price movements in currencies will need more dollars to buy euros, making euro futures more expensive. The FOMC meeting minutes, expected by investors this Wednesday, could be the key mover for the Euro.
Another thing that could push Euro futures higher is the recent concern shown by ECB officials over the weak Euro. A weaker Euro would undermine the ECB’s fight to stabilize prices, as the French central bank governor, Villeroy de Galhau, pointed out. The ECB will closely monitor the impact of the weaker Euro on inflation. Controlling inflation could mean raising interest rates and giving hope to Euro futures bulls.
Euro futures technical forecast: Breaking above 1.0600
The Euro futures 4-hour chart printed a bullish momentum on Monday morning, and for the first time in weeks, RSI is playing above the 50 level. The RSI reading is a sign that bulls are coming into the market, and a bullish close at the end of the day could mean higher prices this week. The Euro futures prices may aim for the key resistance at 1.0800. On the flip side, the yearly lows around 1.0366 provide strong support.
The bullish bias came in when prices broke above and retested the 30-SMA. Since then, the price has been trying to break the 1.0600 level. The bullish momentum seen in the most recent candle shows the possibility of a break to the upside. It would have to be confirmed at the end of the day.