EUR/USD Price Forecast – EUR/USD To Continue Bearish Price Action Having Breached Critical Support Levels

The pair is expected to continue bearish price action in near future as macro data indicate that economic activity in European markets have slowdown significantly and traders in the broad market are expecting further bearish news to follow which could induce further bearish price action.
Colin First

Despite opening on a positive note, overwhelming bearish pressure in European markets owing to worries of economic slowdown saw the pair fall below critical support and settle near Friday’s lows at the close of yesterday’s trading session. Amid subdued trading activity owing to holiday in US markets, the pair experienced a two-way price action which ended on a bearish note. European markets continue to see bearish price action as growth worries increased on disappointing macro data and dovish comments from European Central Bank President Mario Draghi earlier this month. Following yesterday’s Chinese GDP data which saw an unprecedented slowdown in the pace of economic growth, (IMF) changed its global growth forecast for 2019 for the second time in the last six months.

German ZEW Data to Set Pace For Short Term Price Action

Latest update from IMF sees growth forecast reduced even further than announced previously citing a slowdown in China and Euro area economic activity decreasing forecast to lowest in three years. As political and economic issues continue to eat away at investors risk appetite and economic growth, investors expect ECB President Draghi to reiterate and re-emphasize his comments about a slowdown in European economic growth and possibly comment on delaying expected rate hike by ECB for 2019. This has caused the spread difference between 2 years US & German Treasury bond yields to widen further resulting in bearish influence for EURO in the broad market. As of writing this article, EURUSD pair is trading at 1.1351 down by 0.12% on the day.

On release front today, European market sees the release of German ZEW current conditions and economic sentiment data for January 2019 and ZEW economic sentiment (Jan 2019) for Euro area while US market will see the release of Existing home sales for December 2018. German ZEW macro data is viewed as a preview for European market’s economic activity and a dovish outcome which hints at a slowdown in the economy will result in further downside move for EURO in immediate and near future trading scenario. Having breached critical support level of 1.1363, the path with least resistance moving forward is to the downside. Expected support and resistance for the pair area at 1.1348, 1.1336, 1.1324 and 1.1363, 1.1371/77, 1.1390 respectively.

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