EUR/USD Price Forecast – Pair is Consolidating Post Bearish Breakout

The EURUSD pair is now on steady downtrend price action having achieved a bearish breakout during U.S. market hours. US dollar yesterday closed positive for the fifth consecutive trading session. While US Greenback suffered early in the day following U.S. President Donald Trump’s state of union speech, risk-averse investor sentiment, fundamental weakness surrounding EURO and positive macro data updates in U.S. market helped US Greenback make a clear bearish breakout. The pair then continued sharp decline through early Asian session before consolidating near mid 1.13 handle. Despite dovish stance of Fed on rate hike decision, the dollar has managed to retain positive price action in the market as there are still investors and analysts who believe that the Fed is likely to hike rate this year.

Dollar Index Hits New Weekly Highs

Further US Dollar bulls are also seeing fundamental support owing to rebound in U.S. Treasury bond yields which have seen positive action since the market opened for the week. The dollar index is also scaling new weekly highs and broad-based dollar strength. Yesterday the index hit a high of $96.43 and today it hit a high of $96.46 post which it is trading positive and well above yesterday’s high at $96.44 up by 0.06% on the day. As of writing this article, EURUSD pair is trading at 1.1362 up by 0.02% on the day. Given the fact that most major Asian markets aside from China, Hong Kong, and Taiwan are resuming trading activity post-holiday session earlier today, trading volume and volatility has increased significantly. Moving forward investors look to macro data for short term profit opportunities.

On release front today, U.S. Calendar is silent aside from release of Initial Jobless Claims update while E.U. calendar will see the release of German Industrial Production and trade balance data, EU Economic forecast and ECB’s Economic Bulletin. Better than expected E.U. macro data will help EURO find some breathing space and continue consolidative price action while disappointing outcome will help the pair resume its decline towards mid 1.12 handle. When looking from a technical perspective, the path with least resistance moving forward is to the downside. The pair is moving well below 20,50 & 100 MA’s in both daily & hourly intra-day charts. Momentum indicators RSI & Stochastic are seeing their signal line move towards the oversold region in the hourly chart while 4 hours and daily charts are seeing the signal line well below oversold region with an inclination that suggests further downside action is on the table for the day ahead.

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