Euro weekly forecast

The Euro started the week largely flat against its peers, as disappointing Eurozone data left the currency struggling to gain support.

Industrial production in the Eurozone fell by 0.6% in May. However, as this was better than the anticipated 1% contraction, it helped prevent additional losses for the EUR.

On Tuesday, the latest German ZEW economic sentiment index showed a larger-than-expected decline in July, hitting its lowest point in four months and exerting pressure on the single currency. By mid-week, the Eurozone’s finalized inflation rate confirmed a cooling in domestic inflation. Despite this, the Euro strengthened, benefiting from its strong negative correlation with the US dollar, which faced fresh selling pressure.

On Thursday, the European Central Bank announced its latest interest rate decision, maintaining rates at 4.25% as anticipated. ECB President Christine Lagarde did however state that a rate cut in September was still wide open, which led to the common currency struggling to gain support.

The Euro ended the week trading within a narrow range against most of its peers, as the absence of economic data left the currency struggling to gain momentum.

Looking ahead, the main driver of movement for the Euro this week is likely to be the publication of several key data releases from within the Eurozone. On Tuesday, the Eurozone's preliminary consumer confidence index is set to be released. A decline in consumer morale indicated by the data could put pressure on the common currency.

As the week progresses, the Eurozone will release its preliminary PMIs for July. Any unexpected readings from the index could cause the Euro to fluctuate during the first half of the week.

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