EUR/USD Daily Forecast – Euro Falls Into Tight Range Near 1.10 Handle

With concerns over the Coronavirus mounting this week, risk assets have seen volatile price swings while the euro has been little changed against the greenback.

The currency pair found a floor yesterday after a brief dip below the psychological 1.1000 handle but continues to trade in a fairly tight range.

The Federal Reserve held interest rates unchanged as expected on Wednesday. Chair Powell brought up concerns regarding inflation which suggests another rate cut can’t be completely ruled out at this point. While the next policy could go either way, the bar appears to be high at this point for a rate increase.

Powell further talked about the potential for a recovery in the global economy following the recent progress in the US-China trade war but expressed concerns over the Coronavirus outbreak. Powell noted that if China’s economy deteriorates as a result of the virus, the US economy will also be impacted, although not at the same degree as some of China’s neighboring countries.

The Bank of England will meet later today which could spark some fireworks among the Sterling pairs. The markets have been trying to assess whether the BoE will cut rates over the past few weeks but are going into the meeting with uncertainty on how policymakers will act.

Technical Analysis

EUR/USD found support yesterday from a horizontal level at 1.0991 and the lower bound of a trend channel that has encompassed price action since the start of the month.

For most of the week, the 1.1025 level has hindered recovery attempts and this continues to be a line in the sand for the pair in the session ahead.

A break above the level might hint at a broader recovery, with a potential target of 1.1072 which is considered a major resistance level.

Bottom Line

• EUR/USD is little changed in the week thus far and trades in a tight range.
• The pair has bounced higher from a confluence support but is nearing the 1.1025 price point which has been a hurdle for much of the week.