EUR/USD Price Forecast – EUR/USD Downtrend Comes to Halt over NATO Meet’s ProceedingsThe pair has been falling over the last couple of days as the dollar begins to gain strength all across the board
The EURUSD pair on Tuesday made a nose dive on downtrend movement as escalation of the trade war has made a loud noise at the beginning of the day triggering a wave of risk aversion that sent equities nose-diving through the Asian and European sessions. However a report indicating that ECB policymakers are split on when they might raise rates gave an impulse to the common currency. According to the report citing “several sources” the next rate hike could take place as soon as July next year or as late as autumn. The dissent between them is what made speculators run back to buy the EUR albeit investors remaining on cautious stance. The report sent the EUR/USD pair up to 1.1757, its daily high, but the dollar resumed its advance after the release of US June PPI, which showed that inflation and factory levels rose by more than anticipated, with the core readings up 0.3% MoM and 2.8% YoY. The greenback edged higher against all of its major rivals, with the pair falling to fresh weekly lows in the 1.1680 price zone.
EURUSD Freefall Arrested
As of writing, the currency pair is trading at 1.1675 – down almost 1 percent from the weekly high of 1.1791 hit on Monday. The common currency fell back below the bearish (descending) 50-day moving average (MA) on Wednesday, signalling the corrective rally from the June 21 low of 1.1508 has ended. The retreat could be associated with the broad-based USD rally, triggered by a sharp rise in the USD/CNY and USD/JPY pair and stellar US producer price index (PPI) figure. The Asian market session saw the pair come to a halt as German CPI which came at 06:00 GMT was well in line with expectations. French CPI & Euro zone Industrial production data which are to follow shortly are also expected to meet forecasted data. Meanwhile the major factor that helped EURUSD pair to gain stability is proceedings of two day NATO meet that started yesterday in Brussels which saw Trump moving treating a defence meet as a trade organisation rising argument on Germany’s energy trade with Russia.
Investors are on cautious stance as they observe NATO meet proceedings and await update from ECB’s policy meet committee which are expected to provide fresh impetus for the pair moving forward. Trump’s American first attitude and complaints over allied countries contribution to NATO have soured the mood on First day of meeting. US markets will see release of CORE CPI data and Initial Jobless Claims data. The EUR/USD pair could extend the decline further towards 1.16 if the inflation differential rises in the USD-positive manner. On the other hand, a below-forecast US CPI could put a bid under the EUR/USD pair.