EUR/USD Price Forecast – Concerns of Economic Slowdown Puts Pressure on EURO Bulls

The EURUSD pair yesterday saw a sharp downside price action in the global market. While investors risk appetite seemed high as evident from price action in other major forex pairs and equities, Euro turned out to be an exception. The Euro suffered sharp declines following disappointing German macro data update. EURO bulls continue to be weighed down by concerns of economic slowdown as comments from ECB members in recent past & disappointing macro data continue to hint at a slowdown in Euro area economic activity. These factors resulted in the pair declining from the intra-day high of 1.1325 all the way to intra-day lows at 1.1273 handle.

Draghi’s Speech Eyed For Directional Cues

Moving forward, Euro is likely to continue its downside price action during today’s European market hours. The downside price action is likely to be supported by T.Yield price dynamics. The US T.Yields have rebound significantly while German 10-year bond yields saw relatively low recovery. The spread difference between the US & German bond yield widened in EUR negative manner in Asian market hours. As of writing this article, EURUSD pair is trading at 1.1254 down by 0.08% on the day. Investors are now on the lookout for the speech from ECB’s Draghi, Nowotny, and Praet for short term directional cues.

If the speech by ECB members today displays a relatively lower degree of dovish tone when compared to last ECB press conference, EURO bulls may gain strength and spread difference may stop widening even if it doesn’t shrink in USD’s favor. This will help the EURO find support on the downside and prepare for recovery rally. When looking from a technical perspective, the pair needs to breach multiple resistance at 1.1300, 1.1330, 1.1389 price handles and aim for 1.1400 to initiate a stable bullish price action. Meanwhile, the pair will see strong support at 1.1240, 1.1220, 1.1183/74 price handles the downside which needs to be breached for USD to gain control of price action.

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