EUR/USD Daily Price Forecast – EUR/USD Bulls Face Resistance at 1.17 As USD Caps Upward Move on Rising Bond Yields

The EURUSD pair has been on upward biased range bound price action in recent past, however the pair has hit a blockade on its upward move around 1.17 handle. As of writing this article, the pair is trading at 1.1679 up 0.05% on the day and the pair needs to breach resistance at 1.1700 handle in order for continuation of price movement to remain in EURO bulls favor.  The price action in early Asian market hours indicates neutral bias as both sides of pair struggle to gain upper hand. The failure to scale the psychological level of 1.17 in a convincing manner is likely associated with the rising Treasury yields and the widening US-DE (German) two-year yield spread. As of writing, the 10-year treasury yield is trading 3.06%, having clocked a two-month high of 3.10% yesterday. Meanwhile, the two-year US-DE (German) yield spread is seen at 333 basis points, the highest level since 1989.

EURO Could Breach 1.17 Handle as Risk Appetite Remains High in Market Despite Trade War Woes

The common currency could find acceptance above 1.17 if the spread rolls over in favor of the bears. That could happen in the next day or two as the 10-year treasury yield created a doji candle yesterday, signaling a bullish exhaustion. However, if the 10-year treasury yield continues to rise, then a close above 1.17 will likely remain elusive. Meanwhile the dollar index hovered near a seven-week low against a basket of major currencies on Thursday, as safe-haven demand for the U.S. currency ebbed on relief that the Sino-U.S. trade war may not be as damaging as once feared. The dollar index dipped 0.1% to 94.467, near its seven-week low of 94.308 touched on Tuesday, as its more risk-sensitive rivals held firmer. Traders also noted that U.S. macro economic data has remained very strong so far despite trade disputes since early this year.

Real money investors are now buying back undervalued assets, those that were sold aggressively, including the antipodean currencies, as they can’t find any evidence of economic slowdown from trade wars indicating that risk appetite among investors continue to flourish despite trade war woes which could end in favor of the common currency. From technical standpoint, The EUR/USD pair found support at 1.1650 and bounced to the upside, holding in a consolidation range, moving sideways in the short-term. A break under 1.1650 could change the short-term bias to the downside, exposing the pair to support levels at 1.1625-1.1600 handles. As long as EUR/USD holds above 1.1650, another test of 1.1720 could take place. Above the next strong barrier is seen at 1.1745/50, a medium-term resistance that if broken would clear the way to more gains.