Euro exchange rate forecast for the week of May 19-25: Unpredictable, depends on European PMI data

EUR/USD Struggles Without Breakthrough News

The EUR/USD pair entered the new week with a slight weakening momentum after the US dollar (USD) recovered on positive signals from the US-China trade war. In the opening session of last week, EUR/USD fell to a low of 1.1064, before recovering to the 1.1164 area by the end of the week.

The main reason came from initial optimism when the US and China reached a temporary 90-day agreement, in which both sides reduced retaliatory tariffs.

However, the excitement quickly faded as no new information emerged about the negotiations. Talks between the US and Japan are also said to be at a standstill, adding to the cautious market sentiment.

Weak economic data and unclear outlook

Economic data this past week had little impact on EUR/USD. The US CPI in April came in below expectations at 2.3% but was not weak enough to change market expectations for the Fed’s interest rate policy.

US retail sales and consumer confidence also missed expectations, while short- and long-term inflation expectations rose, further strengthening the USD.

On the European side, the ZEW survey showed that economic sentiment in the eurozone improved, but the assessment of the current situation remained low. The region's first-quarter GDP was also revised down slightly from 0.4% to 0.3%. These mixed signals prevented the euro from making a clear breakthrough.

Euro exchange rate forecast for the week of May 19-25: Unpredictable, depends on European PMI data

EUR/USD Forecast This Week: Trading in Correction Zone, Waiting for Breakout

Entering the week from May 19 to 25, the EUR/USD exchange rate is forecast to continue to fluctuate within a narrow range, influenced by both technical factors and market expectations.

Technically, EUR/USD remains in a positive position as it trades above all major moving averages on the weekly chart. However, indicators are retreating from overbought territory and are not yet giving a clear bullish signal.

On the daily timeframe, the choppy trend is evident with consecutive bounces being rejected around 1.1300 – which is also an important resistance level in the short term.

If the rate breaks above 1.1300, the next target zone would be 1.1380, the early May high, and further up, 1.1460 and 1.1573, the yearly highs.

Conversely, if the 1.1160 support level is lost, the correction could drag the pair back to test the May bottom at 1.1064, and further to the psychological level of 1.1000.

The deciding factor: Upcoming PMI data

This week, the focus will be on the preliminary PMI figures for May, released by S&P Global and the Hamburg Business Bank (HCOB) on Thursday. Forecasts currently point to a slight uptick in European service sector growth, while manufacturing remains in contraction territory. These results will directly influence market expectations for the health of the European economy and the direction of the euro.

Meanwhile, a series of speeches by Fed officials this week will also be closely watched, although they may have only limited impact on the USD without clear new policy signals.

Source: https://baonghean.vn/du-bao-ty-gia-euro-tuan-tu-19-den-25-5-kho-doan-phu-thuoc-vao-du-lieu-pmi-chau-au-10297610.html