EUR/USD Daily Price Forecast – EURO Gets a Boost after EU-US Trade Talks

The EU-US trade talks put a bid under the EUR/USD pair yesterday; however, the currency pair is still stuck in a narrowing price range or pennant pattern. The dollar slipped on Thursday and the euro edged higher, as immediate concerns about global trade tensions ebbed after the United States and the European Union agreed to begin talks to lower tariffs. Following talks on Wednesday with European Commission President Jean-Claude Juncker, U.S. President Donald Trump said they agreed to “work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods”. Early on Wednesday, before the Trump-Juncker talks, the single currency slipped to a low of $1.1664 on media reports that Trump was considering imposing a 25 percent tariff on foreign-made cars. But it bounced back on comments of the two leaders that showed desire to find solutions to trade conflicts between the U.S. and European Union.

EURUSD In Range

The dollar’s retreat was limited however as long-term Treasury yields climbed after the U.S.-E.U. trade news improved investor risk appetites and lessened demand for government bonds. There are various forces at work. The dollar had been bought as a safe-haven during ‘risk off’ when trade tensions mounted, and now it’s giving back some gains with the U.S.-E.U. headlines generating “risk on” momentum and focus now shifts to ECB rate decision tomorrow. As of writing this article, the pair is trading at 1.1730 with 0.03% increase in value, having clocked a high of 1.17436 earlier today. The pennant resistance is located at 1.1745 and the support is seen at 1.1592.

The ECB is expected to keep rates unchanged. The common currency may close today above 1.1745, confirming a pennant breakout or a bearish-to-bullish trend change if President Draghi shrugs off trade fears and reiterates end its 2.6 trillion euro ($3.0 trillion) bond-buying scheme by the close of the year. However, if Draghi upsets market expectations for a late 2019 rate hike, then the common currency may find it hard to hold on to gains, if any, above 1.1745. Meanwhile, the greenback could find bids if the US June durable goods orders number, due today at 12:30 GMT, beats estimates. The USD weakness is broad-based. If EUR/USD bulls manage to breakout above 1.1750 areas in near future, EUR/USD can accelrate towards 1.1760-1.1795 supply levels. Expected support and resistance for the day are at 1.1711 / 1.1695 / 1.1655 and 1.1745 / 1.1795 / 1.1820 respectively.