Euro weekly forecast

The Euro started Monday’s session on a gloomy note, with political uncertainty exerting downward pressure on the common currency.

Right leaning, Eurosceptic parties gained ground across the EU, particularly in France, concerns about political instability in the region caused the EUR to plummet to a twenty-two-month low. Political anxiety continued to reign on Tuesday, hammering the single currency. In addition to this, rating’s agency Moody’s warned that France’s snap election could negatively impact the country’s credit score.

On Wednesday, a tumbling US Dollar saw the Euro recoup some of its recent losses, due to the currency pairing’s negative trading relationship. Both headline and core inflation in the US cooled to unexpected levels, sparking a huge USD sell-off and rocking global markets. However, increased risk appetite later in the session led to a retreat in the EUR, given its safe-haven nature, as investors favored riskier currencies.

Thursday saw the latest industrial production data from the Eurozone fell short of expectations of 0.2%, unexpectedly contracting by 0.1%. This development served to undermine the common currency.

An deluge of commentary from European Central Bank policymakers on Friday was largely overshadowed, as rate-setters maintained a cautious stance, resulting in the EUR trading sideways as the week ended.

Looking ahead to this week, inflation data for the Eurozone is due to be released this week. The Eurozone’s finalized inflation figures are expected to show a slight increase to 2.6%. This could enable the EUR to recover some of its recent losses amid changing expectations regarding ECB rate cuts.

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