EUR/USD Daily Price Forecast – Euro Gains Ground As Dollar Saw Profit Booking Activity

The EUR/USD is mildly bid around 1.1650 but may surrender gains in European session. The upward movement that occured in early hours of Asian market session is result of investors across the globe booking profits on US greenback’s recent bull run. However the outlook for US dollar remains positive owing to hawkish comments from US Fed Chair Jerome Powell and is likely to gain upper hand as trading session moves into European and American session. Stocks on major world markets climbed to a one-month high on Wednesday after a raft of strong corporate earnings; while the U.S. dollar hit a three-week high against major currencies on increase in bid activity surrounding US Greenback. However profit booking activity has dampened dollar’s momentum temporarily. In congressional testimony on Tuesday and Wednesday Powell said he believed the United States was on course for years more of steady growth, and played down the risks to the U.S. economy of an escalating trade conflict.

EURUSD Still in Tight Range

Against a basket of six major currencies the dollar index rose to a three-week high of 95.4 before settling around 95.08, up 0.2%.The Fed is expected to hike rates two more times in 2018 to tackle rising inflationary pressures. Comparatively, the ECB is expected to start raising rates only in mid-2019.Euro zone growth outpaced that of its major peers last year for the first time since the 2007-08 financial crises. But the latest poll of more than 100 economists, taken July 10-18, suggests growth momentum has already peaked. An escalating trade row between the United States and its trading partners remains a real risk to the euro zone and has prompted many economists to trim their growth forecasts.

Gross domestic product growth was forecast to average 2.1 percent this year, 1.8 percent next and 1.6 percent in 2020, slightly lower than the 2.2 percent, 1.9 percent and 1.7 percent predicted, respectively, last month. Still, more than 70 percent of economists – 51 of 69 – who answered an additional question said they were confident the ECB would hike rates before the next economic downturn. Eighteen economists said they were not. According to a poll of economists undertaken by Reuters, many are expecting the European Central Bank (ECB) to lift rates sometime in the second half of 2019, which respondents believe will happen before the next potential economic downturn. On release front, US Calender will see Philadelphia Fed Manufacturing Index data For July which has bullish forecast and if data matched expectations, this should serve as a trigger for dollar to regain momentum and try to breach yesterday’s resistance levels. European calendar has no major releases scheduled for the day. Expected support and resistance for the pair are at 1.1602 / 1.1570 / 1.1535 and 1.1670 / 1.1700 / 1.1740 respectively.