EUR/USD Price Forecast – EURUSD to Consolidate Near Mid-1.13 Handle on Weak USD

The EURUSD pair last week saw steady upside price action with all losses incurred following dovish ECB update in early March fully reversed by E.O.D. on Friday. The upside price action of the pair was supported by weaker US Greenback in the broad market. For the majority of last week’s trading session, US Greenback suffered from high dovish pressure owing to declining US Treasury Yields and disappointing macro data updates from the US economic calendar. Also, positive proceedings in the UK parliament on Brexit front provided some level of fundamental support to Euro facilitating steady upside move and reversal of early loss.

Shrining Short Term T.Yield Spread Underpins EURO

Since trading session opened for the week in Pacific-Asian market hours, the pair has managed to hold on to steady upside price action and moved well near last week’s highs as the spread difference between 2-year US-Germany government bond yields shrunk to 11-months low. This is a highly bullish factor for EURO bulls as the spread difference has fallen below 300 points for the first time since April 2018. The pair hit a new two week high during Asian market hours at 1.13449 on influenced gained by declining spread difference. As of writing this article, EURUSD pair is trading 1.1341 up by 0.13% on the day. Moving forward investors are focused on macro data updates for short term profit opportunities.

This week will see the release of the latest FOMC interest rate decision and traders are expecting that the Fed’s forward guidance is likely to be dovish even if they keep interest rate unchanged for the month. Speech from Fed members in recent past suggested that they were even ready to cut interest rates if needed depending on economic conditions. Given disappointing macro data released so far this month, investors believe that Fed is likely to retain dovish stance and reiterate their plans for rate reduction in case the macro data updates from the US continue to retain the disappointing tone in near future. This has led to USD weakening in broad market adding to the EURO’s strength during Asian market hours and is expected to continue supporting the pair on its positive price action for rest of the day. On the release front, both EURO & U.S.A see the release of second-tier macro data updates. E.U. calendar sees the release of trade balance data and speech from ECB members De Guindos & Peter Praet while the U.S. calendar will see cap goods ship non-defense ex-air data. Expected support and resistance for the pair are at 1.1329, 1.1300, 1.1296/95 and 1.1367, 1.1388, 1,1419 respectively.