EUR/USD Price Forecast – EUR/USD Tests 1.17 Handle Ahead of ECB President Draghi’s Speech

US market saw an increase in Job’s creation but the unemployment rate was unexpectedly high which pressured US dollar to take on dovish price action. The escalating trade war between the country and China added to the dollar’s weakness, as starting Friday, reciprocal tariffs came into effect, with US President Trump menacing to escalate it further, and impose tariffs on an amount similar to the total of US imports from China from last year. The EUR on the other hand, found additional support on a report released Thursday, indicating that ECB’s policymakers believe that rising rates by the end of 2019 would be “too late.”

EURUSD Buoyant

Trade tensions between the US and China will likely continue weighing on market’s mood for a major part of this week’s trading session. The upswing in EURO’s favor could also be viewed as a result of improving Euro-area data and fewer political worries when compared to current US political climate and Europe’s own political issues a fortnight earlier. As of writing, the currency pair is trading at 1.1745/65 price range. Meanwhile, the steep flattening of the Treasury yield curve is likely weighing over the US dollar as well. Currently, the spread between the US 10-year and 2-year treasury yield stands at 28 basis points – the lowest level since August 2007.

When looking at the economic calendar, US markets remain light today while investors are on the lookout for a highly active European calendar with ECB President Draghi’ speech scheduled later today followed by German economic sentiment data on Tuesday. Mario Draghi is scheduled to testify before the Committee on Economic and Monetary Affairs of the European Parliament about the economy, monetary policy, and virtual currencies in Brussels. The EUR pairs could turn volatile during Draghi’s speech and the common currency may pick up a strong bid if the central bank chief sounds hawkish on interest rates. The rebound momentum is currently slowing down over stiff resistance around 1.175 handles and the pair needs to clear 1.175 hurdles to continue moving further up in trading hours this week. Expected support and resistance for the pair are at 1.700, 1.1637 and 1.1800, 1.1850 respectively.