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EUR/USD Price Forecast – EUR/USD Continues at 1.16 Handle as Dollar Loses Momentum

By:
Colin First
Published: Jun 25, 2018, 07:02 UTC

The pair has been chopping around with no specific direction

EURUSD Monday

The pair opened for the week on a flat note, but the common currency seems to hold fort at 1.16 handle as US Greenback loses momentum against major global pairs on renewed trade fears. The dollar fell to a two-week low against the yen on Monday as a latest flare-up in global trade concerns dented investor risk appetites and drove down U.S. yields. The falls were triggered by a report from the Wall Street Journal that U.S. President Donald Trump plans to bar many Chinese companies from investing in U.S. technology firms and block additional technology exports to China. Also Investors took to cautious stance after U.S. President Donald Trump on Friday threatened to impose a 20 percent tariff on all cars imported from the European Union. The EU responded by saying it will have no choice but to retaliate to such a move. Dollar was already looking shaky against the yen in wake of the U.S. spat with the EU. Any positive breakthrough in trade talks would prompt bargain hunting of the dollar, but the possibility of same looks very thin.

EURUSD Choppy

The dollar index against a basket of six major currencies stood at 94.559 having retreated from 95.529, its highest level since July 2017 scaled early on Friday. The greenback had climbed to the 11-month peak as higher U.S. yields underlined the divergence in monetary policies between the United States and Europe. The dollar however began to sag towards the end of last week as U.S. yields lost their lift amid heightened trade tensions between Washington, China and the European Union. The 10-year Treasury note yield fell to a one-week low of 2.871 percent on Monday. Euro currently holds steady above 1.1630 handle despite slight range bound momentum. The single currency was lifted after Friday’s upbeat German and French business activity data and fresh assurances by Italian politicians that their nation would not leave the single currency.

EURUSD Hourly
EURUSD Hourly

While Euro seems to have upper hand in short term, any long term gains will be based on proceedings of US-E.U trade negotiations. On release front, investors are on lookout for German ifo Business Climate data in Euro zone and New home sales data in US markets. Hourly indicators are leaning overbought, short traders are primed for an entry if market sentiment continues to head south after the weekend’s trade war developments. German IFO survey results could edge out the short side if results are positive. On the flip side, the 1.1640-30 region might continue to act as an immediate support and is followed by the 1.1600 handle. A sustained weakness back below the mentioned support might negate prospects for any further recovery and turn the pair vulnerable to slide back below the 1.1540 horizontal support towards challenging the key 1.1500 psychological mark.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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