EUR/USD Daily Price Forecast – EUR/USD Tests 1.17 Handle Ahead of Draghi’s Speech

The EUR/USD pair regained positive traction at the start of a new trading week and reversed all of its losses recorded on Friday. Broad-based US Dollar selling pressure, amid escalating US-China trade tensions, was seen as one of the key factors driving the pair higher for the fifth session in the previous six. On the economic data front, the final Euro-zone CPI confirmed the flash readout of 2.0% y/y in August and remained supportive of the positive tone surrounding the shared currency. The US President Donald Trump imposed 10% tariffs on about $200 billion worth of Chinese imports and warned to pursue tariffs on $267 billion of additional imports if China takes retaliatory action. As of writing this article, the pair is trading at 1.1688 up 0.04% on the day.

Trump Imposed Tariffs On Chinese Goods With Promise For More in Future

The news provided a short-lived boost to the greenback during the Asian session on Tuesday, with the pair dipping to 1.1665 area just to rebound quickly to the 1.1700 handle. The recovery is likely associated with conciliatory comments from China’s commerce minister. Today’s key focus would be on the ECB President Mario Draghi’s scheduled speech, where any relevant comments related to monetary policy should influence the common currency and provide some meaningful trading opportunities. Apart from this, the economic docket lacks any major market moving releases and hence, the USD price dynamics might continue to act as a key driver of the pair’s momentum through Tuesday’s trading session. Although odds of a big risk-on move are quite low, as the prospects of a breakthrough deal between the US and China are quite low.

The EUR/USD may also find acceptance above 1.17 if the European Central Bank (ECB) President Draghi downplays the trade tensions and reiterates that the QE program will likely end in December.From a technical perspective, the pair still needs to make it through August swing high resistance near the 1.1720-30 region, before traders start positioning for any further near-term appreciating move. Beyond the mentioned barrier, the momentum is likely to get extended towards reclaiming the 1.1800 handle before the pair eventually aims to test the 1.1840-50 supply zone. On the flip side, sustained weakness back below 100-day SMA immediate support, currently near the 1.1670-65 region, might reinforce the stiff chart resistance and drag the pair back towards challenging the 1.1610-1.1600 horizontal support.