EUR/USD Daily Price Forecast – EUR/USD Range Bound Around 1.165 Handle As Pair Breached 200DMA

The EURUSD pair continued its bearish movement in North American market hours last night losing over 100 pips as the trading for the day came to end reaching as low as 1.1633 despite relatively thinner activity in overnight market hours. Thursday’s upbeat macroeconomic data releases from the United States boosted the demand for the greenback, which was already gathering strength against its rivals following Wednesday’s FOMC event, and weighed on the USD denominated pairs. As expected, the third estimate of the second quarter real-GDP growth in the U.S. remained unchanged at 4.2%, and durable goods orders rebounded with a 4.5% rise in August following July’s 1.2% decline. The pair continued to move below 1.165 handle in early Asian hours and has since maintained a range bound price action and is currently trading at 1.1640 down by 0.30% on the day.

Investors Focus on Italy German Spread Difference For Clues To Place Bets

Analysts believe that USD has fundamental support for continued growth from local market in near future as they believe that Chairman Powell’s comment in his recent speech that “The U.S. economy is in a particularly good spot” is based on and supported by fact that despite the August pause the six months to July saw the strongest investment spending in five years as event from macro data history and when looking at USD’s price action in broad market and recent positive outcome of durable goods orders and excellent  business spending, Dollar could find stable bullish influence from American markets alone  rather than be moved based on geo-political events. Meanwhile, Italy’s Deputy Prime Minister Salvini announced that the Italian government agreed on a 2019 budget deficit target at 2.4% of the GDP, for the next three years, defying Brussels ‘s demands that Italy cut the fiscal deficit to address its high debt.

Nevertheless, this announcement did little to nothing help the shared currency recover its losses. As a result, the spread between the 10-year Italian government bond yield and its German counterpart could spike, bolstering the already bearish technical setup in the EUR/USD. Also, if the yield spread does spike, then the markets may not pay much attention to the preliminary Eurozone CPI, scheduled for release at 09:00 GMT. Meanwhile on the other side of Atlantic, US markets will see the release of core-PCE price index, the Fed’s favorite gauge of inflation, from the U.S. At the moment, the pair is testing the critical 1.1640 support. With a decisive break below that level, the pair could extend its losses to 1.1570 / 1.1500 levels while on the upside, near-term resistances could be seen at 1.1665, 1.1755 and 1.1815 price levels.