EUR/USD Price Forecast – EURO Declines Owing to Lack of Fundamental Support

EUR/USD pair continues to trade range bound within slight bearish bias since yesterday. US Greenback has been slowly gaining strength since the start of the week as caution surrounding Brexit and UK Parliamentary proceedings inspired a risk off trading activity in global markets. Further a steady pick up in US Treasury bond yields and headlines surrounding last week’s Sino-U.S. talks – US trade representative, Robert Lighthizer comments that no solid progress was made on key issues between the two nations inspired further risk off trading activity on worries of escalation in Sino-U.S. trade war. Risk off trading activity in forex markets is greatly affected major currencies and Euro which is viewed as leader of major global currencies is suffering significantly.

Prolonged Risk Off Trading Activity Underpins US Dollar

Owing to ongoing internal political and economic issues in Euro area, EURO bulls lack support from fundamentals. Further dovish comments from European Central Bank President Mario Draghi during his speech earlier this week when he cautioned of slowdown in Euro area economic activity took the wind out of EURO’s sails leaving the pair at mercy of USD price dynamics and broad based risk appetite. UK PM May won the vote of confidence in UK parliament but the same had no effect on pair’s price action as said possibility was already priced into market price action. As of writing this article, EUR/USD pair is trading flat at 1.1386 down by 0.09% on the day.

On release front, European markets will see release of EZ CPI data while US market will see the release of Building permits, Housing starts, Goods trade balance data, Philadelphia Fed manufacturing Index and new home sales data which are expected to keep the pair highly active across the day. Ahead of a busy macro data schedule the pair is trying to gain strong support at 1.38 handle and aim for 1.14 handle. When looking from technical perspective, the path with least resistance seems to be on downside as both RSI & Stochastic indicators remain near mid line in daily chart while in 4 hour chart the seem to move towards oversold territory.