EUR/USD Price Forecast – EUR/USD Turns Bullish On Broad Based US Greenback’s Weakness

Broad based weakness surrounding US Greenback that carried over from last week’s close was further boosted by headlines from weekend resulting in Euro gaining upper hand as trading session began for the day.
Colin First

The US Dollar drifted lower through Friday’s trading session and was being weighed down by uninspiring monthly jobs report, showing that the economy added only 155K new jobs in November. The greenback was further pressured by some dovish comments by the Fed Governor Lael Brainard and St. Louis Fed President James Bullard, which added to recent speculation over a possible pause in the Fed rate hike cycle in 2019. The USD selling bias helped offset signs of weaker economic growth in the Euro-zone and assisted the EUR/USD pair to build on its steady climb to finally end the week on a positive note, just above the 1.1400 handle. A revised reading of third-quarter GDP print showed that the Euro zone area’s economic growth stood an annual rate of 1.6%, just below the original estimate of 1.7%, though did little to prompt any fresh selling.

Positive Price Action In Favor of EURO To Continue Across Today’s Market Hours on Lack of Market Moving Updates

This combined with a below-forecast China import and export growth figure released over the weekend likely bolstered the fears of a global growth slowdown and prospects of Fed rate pause in 2019. As a result, Asian desks offered the greenback across the board pushing the pair near three week tops. As of writing his article, the EURUSD pair is trading at 1.1430 up by 0.45% on the day. Meanwhile, rising US-China tensions, following the arrest of a top Chinese executive in Canada at the request of the US, continued weighing on investors’ sentiment and might keep a lid on any runaway rally amid absent relevant market moving economic releases, either from the Euro-zone or the US. The dollar sell off is likely to extend well into European market hours as dovish turn is Fed expectation is positive for US Dollar denominated major global currencies amid decreased exchange rate.

On release front today, while both US & European markets remain relatively silent, US market hours will see release of JOLTs Job Openings which if turns out hawkish could boost US Greenback’s broad based market sentiment. When looking from technical perspective, the pair has managed to clear an important descending trend-line resistance, forming a part of a symmetrical triangle on the daily chart. Any further up-move has the potential to continue lifting the pair towards testing an important confluence hurdle of 55-day MA at 1.1435. A close above said level during today’s trading session will confirm triangle’s breakout and provide support for sustained move to breach 1.15 handle. But the breakout may remain elusive if the US treasury yield turns higher. On the flip side, the 1.1400 handle now seems to protect the immediate downside, below which the pair is likely to head back towards testing the 1.1345-40 horizontal support. A subsequent weakness below the mentioned support would negate the constructive outlook and turn the pair vulnerable to finally break below an ascending trend-line support, currently near the 1.1300 handle.

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