EUR/USD Price Forecast – EUR/USD To Continue Range Bound Price Action Ahead of Tomorrow’s ECB UpdateHaving recovered from multi-week lows during the overnight trading session, the pair is expected to continue range-bound price action ahead of tomorrow’s ECB MPC update.
EURUSD closed on a relatively neutral note yesterday having experienced sharp two-way price action on news driven momentum. While prevalent safe have demand dragged the pair to 16-day lows in the early trading session, the decline in US equities following conflicting headlines relating to Sino-U.S. trade talks pushed greenback lower in broad market helping EURO recover from intra-day lows. But US dollar managed to retain its bullish momentum as growth worries and trade war fears continue to inspire risk off trading activity which has resulted in range-bound price action during Asian market hours today post yesterday’s neutral close. US dollar is also weighed down in the broad market owing to dovish fed stance on rate hike plans for 2019 and partial shutdown in US government.
Conflicting Headlines Relating To Sino-U.S. Trade Talk Helped EURO Rebound From Multi-Week Lows
Reports hit the market that U.S. government had denied China’s request for preparatory talks this week ahead of next week’s high-level talks between two nations which caused Greenback’s decline but reports on same was shortly denied by House economic adviser Larry Kudlow which helped prevent the sharp slide. However, investors are still wary over proceedings of Sino-U.S. trade talks as clear details on what topics were discussed in meeting earlier this month hasn’t been revealed yet and US Treasury Department recently commented that key issues remain unresolved. Any escalation in Sino-U.S. trade war will continue to hurt global growth which has caused investors to take on cautious note awaiting further details on said proceedings. As of writing this article, the pair is trading on a neutral note at 1.1367 up by 0.07% on the day.
The pair is now expected to continue its range bound action above critical support of 1.1363 for rest of the day as there are no major releases scheduled in both US and European markets. As risk off trading activity and news driven momentum dominated price action yesterday, macro data updates from both sides of Atlantic had no impact on the price action of the pair. Moving forward, investors focus is on forward guidance from ECB and their opinion on Euro area economic activity during their post-MPC update conference scheduled tomorrow. Given ECB President Draghi’s dovish comments earlier this month, if comments from other ECB members mirror Draghi’s sentiment EURO will see sharp downside price action. As investors await ECB MPC update, they are expected to hold back from placing any major bets today which also supports the possibility of range-bound price action across today’s market hours.