EUR/USD Price Forecast – EUR/USD Rebounds From Overnight Decline On Positive Cues From Asian Market

Risk aversion dominated global financial markets on the first trading day of the New Year and eventually pushed investors towards perceived safe-haven currencies. Weaker Chinese economic data fueled global growth worries and sparked a global equity selloff. The global flight to safety helped partly offset uncertainty over the pace of Fed rate hikes in 2019 and provided a strong boost to the US Dollar. The EURUSD pair managed to stage significant recovery during early Asian market hours post sharp decline on news of revenue warning from tech giant Apple Inc. which capped risk sentiment in market in later half of American market hours. But sharp downside move was limited over positive news from Chinese markets which saw its central bank adjusting policy to benefit more small firms that are having trouble obtaining financing, in its latest move to ease strains on the private sector, a key job creator. The EUR/USD pair witnessed a dramatic turnaround and tumbled over 170-pips intraday from the vicinity of the key 1.1500 psychological mark, further weighed down by dismal Euro-zone macro data.

Trading is expected to be Constrained Ahead of Friday’s EU Inflation/US NFP Double-Header

According to the final Markit Manufacturing PMIs, business activity in Italy and France contracted in December, while the composite Euro-zone PMI confirmed its lowest reading seen since February 2016. The downfall was further exacerbated by relatively thin liquidity conditions which along with cues from Wall Street served as trigger for EURO’s decline. The pair dropped to the 1.1300 neighborhood but managed to quickly recover back above mid-1.1300’s 1.1361 up by 0.17% on the day as of writing this article. In absence of any major market moving Euro Zone economic releases, the broader market risk sentiment might continue to influence the USD price dynamics and produce some meaningful trading opportunities. Later during the early North-American session, the US ISM manufacturing PMI will also be looked upon for some short-term impetus.

The key focus, however, will be on Friday’s economic docket, highlighting the release of flash Euro-zone consumer inflation figures and the closely watched US monthly jobs report, popularly known as NFP. When looking from a technical perspective, overnight sharp rejection slide from 100-day SMA pointed to the emergence of some fresh bearish pressure and hence, a follow-through weakness below the 1.1300 handle, towards challenging the 1.1265 horizontal support, now looks a distinct possibility.On the flip side, any subsequent recovery move is likely to confront some fresh supply near the 1.1400 handle, above which the pair is likely to head towards testing the 1.1445-50 supply zone. A follow-through buying might negate any near-term bearish bias and assist the pair to make a fresh attempt towards conquering the 1.1500 round figure mark.