Euro-Dollar Week Ahead Forecast: Steadying after Correction Fizzles, but Vulnerability Lingers

The Euro-to-Dollar exchange rate was an outperformer last week but with an earlier correction having ran its course, technical analysts see scope for the Euro to rise further in the coming days, although shaky global markets and homegrown economic risks mean it remains vulnerable to periodic setbacks. 

The Euro-to-Dollar rate bucked a risk-averse mood in global markets on Friday to lead a Eurozone rally into the weekend even after the continent's corronavirus vaccination attempt was dealt another setback, although some analysts have warned this strong performance may not last and have urged caution.

The Euro-Dollar rate swung into the black for the week on Thursday after the European Central Bank (ECB) stayed its policy course while offering a curious potential sop to the hawkish members of its Governing Council, which could risk inciting unhelpful exchange rate pressures if taken further.

The Euro-to-Dollar exchange rate beat a hasty retreat from earlier highs on Wednesday, leading a rout in Eurozone exchange rates that made Europe's unified unit the worst performing major currency for the session ahead of Thursday's policy decision from the European Central Bank (ECB). 

The Euro-to-Dollar exchange rate led the Euro to outperform non-European currencies on Tuesday after Germany's ZEW survey surprised on the upside of expectations and as Italian political risks ebbed, although technical analysts warned the Euro's correction could have further to run. 

EUR/USD is at risk of going below 1.20 according to analysis from JP Morgan.

The Euro-to-Dollar exchange rate closed its worst week for months on Friday but could have further to fall over the coming days as European Central Bank (ECB) currency concerns, a setback on vaccinations and bearish technical signals from charts all point the single currency toward six-week lows around 1.20. 

The Euro was carrying its largest weekly loss for nearly three months on Friday after capitulating previously at what were new multi-year highs for the trade-weighted single currency, only now the Euro-to-Dollar rate may need to see a rally by either the Pound or Chinese Yuan if it is to sustain a meaningful recovery.