EUR/USD Price Forecast – EUR/USD Pair On Downward Price Action Over Cautious Investor Sentiment

EURUSD pair still continues consolidative price action inside its long term price limitations. While US Greenback remains weak in broad market post comments from Fed Chair Jerome Powell and risk sentiment remains relatively high in broad market, majority of popular risk assets (forex pairs) including EURO has taken a sharp downward dive in Asian market hours today. Investor sentiment remains positive and continues to provide fundamental support for market bulls in immediate and near future backed by Sino-U.S. trade optimism. However investors turned cautious on news that North Korean leader Kim Jong Un is visiting China. Kim sent a veiled threat on New Year stating while he is ready to meet Trump anytime to achieve their common goal of denuclearization of the Korean peninsula, he is also open to idea of seeking an alternative path to a summit with Trump if U.S. sanctions and pressure against the country continues.

Kim’s Visit to China Inspires Risk off Trading Environment

This is his 4^th visit to China since 2018 and while no media has been able to provide official sighting of Kim’s presence in China, media has reported that a green train with a yellow stripe similar to one Kim used to arrive in China last year has been sighted in Beijing’s station today morning post which a heavily guarded motorcade was reported leaving the station. Any escalation in tensions between US & North Korea will also greatly hurt market sentiment which has caused investors to book profit on yesterday’s gains and maintain a cautious stance awaiting further updates. Investors are now on lookout for headlines from two-day Sino-U.S. talks which are expected to conclude today and a positive outcome with possible reference to key issues being addressed during the talks will give market the trigger needed for next leg of bullish price action. As of writing this article, EURUSD pair is trading at 1.1442 down by 0.28% on the day, having rebounded from intra-day lows of 1.1432.

The common currency is also weighed down by local political woes such as French Yellow vest protest and Brexit proceedings both of which are painting a bearish picture in immediate and near future. Downside was limited despite lack of fundamental support on broad based weakness surrounding US dollar for second trading session this week. On release front, European Calendar has no major updates scheduled for the day while US calendar will see release of US trade balance and JOLTs Job opening data. When looking from technical perspective, the pair continues to display range bound action limited by wider price range of 1.1265 & 1.1498 respectively. In the 4hr chart the pair is moving above 20, 50 & 100 day moving average with RSI & stochastic indicators near mid line while daily chart is seeing price fall below 100 day MA but remain above short term 20 & 50 day MA suggesting that the pair is unlikely to breach wider price band limit. A breach below short term MA’s confluence point at 1.1365 could see the pair falling to lower end of consolidative range near mid 1.12 handle.