EUR/USD Daily Price Forecast – EUR/USD Moves Range Bound Ahead of EUROZONE CPI

On Thursday, the EUR/USD pair struggled to build on its momentum beyond the 1.1700 handle and finally ended in red for the first time in the past four trading sessions. Uncertainty surrounding Italy’s budget plans was seen as one of the key factors weighing on the shared currency. This coupled with reemerging concerns over Turkey’s currency crisis further triggered typical safe-haven flows into the US Dollar. The Turkish Lira was again under pressure on Thursday and was down another 4% on news that the deputy governor of the nation’s central bank would resign. Investor concerns over Italy’s fiscal health resurfaced, pushing the government’s borrowing cost to multi-year highs. On the economic data front, softer than expected German inflation figures failed to inspire the bulls and did little to lend any support. From the US, consumer spending data for July indicated strong economic growth, while the core PCE price index hit the Fed’s 2% target for the third time this year, reinforcing prospects for gradual rate hikes.

Macro Data Outcome Eyed to Set The Momentum For EURUSD Moving Forward

Meanwhile, the downfall seemed cushioned, at least for the time being, with the pair regaining some positive traction during early hours of Asian session. Friday’s economic docket highlights the release of prelim Euro-zone consumer inflation figures and the US Michigan Consumer Sentiment Index for August, which might provide some short-term trading opportunities on the last trading day of the week. The key focus, however, will remain on emerging market currencies and any fresh trade-related developments. Nevertheless, the pair still seems on track to post third consecutive weekly gains. As of writing this article, EURUSD is trading at 1.1682 down by 0.13% on the day. A close today below 1.1642 would mean the rally from the 1.1301 has ended and path would open up downside towards 1.1530. On the other hand, a daily close above 1.1718 would signal a continuation of bullish rally that is currently prevalent in the market.

The pair may suffer a bearish reversal if the ratings agency Fitch downgrades Italy, citing fiscal concerns, sending the 10-year Italy-Germany bond yield differential to fresh five years. On the other hand, the yield differential could narrow sharply, helping the EUR regain yesterday’s losses if Fitch keeps Italy’s ratings unchanged. From technical perspective, the pair still needs to clear an important barrier near the 1.1740 region, also coinciding with 100-day SMA, above which traders are likely to start positioning for any further near-term appreciating move. A convincing break through the mentioned hurdle now seems to lift the pair beyond the 1.1800 handle towards testing its next major resistance near the 1.1850 region. On the flip side, a sustained weakness below the 1.1650-40 immediate support zone might now turn the pair vulnerable to break below the 1.1600 handle and head towards retesting the 1.1535-30 important horizontal support.