EUR/USD Price Forecast – G7 Word War & Weak EZ Macro Data has EUR/USD Moving Range BoundThe pair is locked into a range as global concerns increase
The EUR/USD created an inverted bearish hammer on Thursday and a bearish hammer on Friday, signaling the corrective rally from the recent low of 1.1510 has run out of steam in the 1.1840 neighborhood. The bullish exhaustion could be associated with downside economic surprises from Germany and France (dismal industrial output numbers) and the resulting fear that the ECB will refrain from discussing QE taper at its July meeting. The G7 disaster and the heightened trade tensions could force the Fed to adopt a slower rate hike path and complicate ECB’s QE taper plans. So, both EUR and USD are at risk. That said, the USD could still find bids, given that the rate differential favors the greenback.
Prices In Range
Moving forward investors are going to focus on CPI, PPI, retail sales data and FOMC statement from US Calendar and European Central Bank policy meet in which most investors believe decision for QE easing would be decided, also investors focus of Eurozone CPI data update scheduled to release this Friday. Analysts believe that current economic data shows strong possibility of interest rate hike during FOMC meet to be held later this week however US President Trump’s recent actions in G7 summit has led to lot of speculations on more trade tariff impositions on US products which could damage US economy greatly. Given that US President Trump failed to neutralize escalating tensions in Canada and Mexico on tariff related issues earlier last month, it is highly likely that US President Trump is going to push his “America First” policy which could greatly damage diplomatic and trade relations with its allies in near future.
The back-to-back hammer candles on the daily chart signal the corrective rally has stalled. Further, the 50-day moving average has crossed the 200-day moving average in an EUR-negative manner. However, the weekly chart paints a bullish story. Last week’s positive price action has confirmed a bullish doji reversal. Also, the 100-week moving average has crossed the 200-week moving average in an EUR-positive manner. The Euro against the US dollar was pushed down after failing to breakthrough 1.18021 in the 60 minutes price chart. There were numerous fail attempts in the past to breakthrough so this price point is now quite critical. A break above 1.18021 could see Euro prices head up towards 1.18264 and 1.18438. Failure could see prices fall to 1.17760 and 1.17562.