EUR/USD forecast after the strong German trade data

The EUR/USD stabilised at the 1.1750 range even after the strong German trade data. The pair is about 1.30% below the highest level last week.

German trade data

The German economy did relatively well in June even as the automobile sector continued to suffer from the ongoing parts shortage. According to the country’s statistics agency, the country’s total exports jumped by 1.3% from the previous month. This translated to a 23.6% increase from the same month in 2020 as the country went through the coronavirus pandemic. In total, the country exported goods worth more than €118.7 billion euros. 

In the same period, the country imported more goods than in May. The total imports increased by 0.6% from May to €102.4 billion. This increase was 27% higher than in the same month a year before. As a result, the total trade surplus widened to more than €16.4 billion.

The exports and imports numbers are important indicators of the economy because they form an important part of the GDP calculation. The EUR/USD will next react to the latest surveys numbers by the ifo Institute.

Meanwhile, the EUR/USD price is reacting to the latest numbers and events in the United States. On Friday, data showed that the American economy added more than 943k jobs in July while the unemployment rate declined to 5.3%. The job rise was the highest since the pandemic started while the jobless rate was the lowest. 

Looking ahead, the next key figure to watch will be the latest US inflation data scheduled for Wednesday. These are important numbers because they form part of the Fed’s dual mandate. Analysts expect that the prices continued rising in August. The pair will also react to the latest US infrastructure progress.

EUR/USD forecast

The 4H chart shows that the EUR/USD has found a strong support at 1.1752, which was the lowest level in July. The pair has struggled to move below this level several times before. It remains below the short and longer-term moving averages and along the lower line of the Bollinger Bands. The Stochastic Oscillator has also moved below the oversold level.

Therefore, the outlook for the pair is mildly bearish, with the next key target being at 1.1700. In a note, analysts at ING said:

“Barring major surprises in the ZEW, and considering there are no other major data releases in the eurozone nor any scheduled ECB speakers, EUR/USD may move break the lows (1.1750) of its recent trading range.”