EUR/USD Price Forecast – EUR/USD Steady above 1.14 Handle over Dovish US Fed CommentsA weaker US Dollar across the board supports Euro’s upward price action.
The EUR/USD pair on Friday moved back above 1.14 handle as news hit market that US President Trump mentioned China wants to make a trade deal. While Trump mentioned that the deal between US & China hasn’t reached an acceptable level, US Government will not impost any new tariff’s upon China. This comment boosted investors risk appetite which helped EURO gain momentum in broad market on last trading session of the week. This was further supported by a broad based correction of US Greenback resulting in the pair seeing a 200 pip boost from 2018 lows hit on Monday at 1.1215 mark and the pair closing in favor of EURO up by 0.81% on the day.
EURO’s fundamentals Do Not Support Recent Gains
The EUR/USD pair has been trading well near Friday’s highs around 1.14 handle in early Asian market hours as investors have taken cautious stance following dovish comments from Richard Clarida, the Fed’s newly appointed vice chair who commented that a slowdown in global growth is something that is going to be relevant for the outlook for the U.S. economy and Reserve Bank of Dallas President Robert Kaplan, in a separate interview with Fox Business, also said he is seeing a growth slowdown in Europe and China. While analysts view these comments as acceptable risk factor since it is given that the Fed has always remained data dependent for rate hikes, investors have interpreted the latest comments in dovish fashion resulting in broad based US Greenback’s weakness.
As of writing this article, EUR/USD pair is working at 1.1404 mark down by 0.11% on the day in a range bound fashion slightly below Friday’s high of 1.1419. However it is highly unlikely for EURO to hold on to these gains in long term as the fundamentals point in different direction as last week’s European macro data saw poor outcome. Euro has traded almost exclusively on anti-dollar flows and risk appetite and we expect the same this week as the currency looks past any weakness in Germany’s PPI report or Eurozone PMI’s however outlook for US dollar remains steady in medium to long term as both investors and analysts expect US Fed to hike interest rate and provide hawkish forward guidance.