EURUSD Price Forecast – EUR/USD Trades Range Bound Ahead of US NFP Update

Sideways action continues ahead of event filled European and US market hours
Colin First
EUR/USD
EUR/USD

EUR/USD is back under pressure following another failed attempt to test the November-high (1.1500), and the exchange rate is expected to continue consolidative price action ahead of the U.S. Non-Farm Payrolls (NFP) report scheduled to release later today. The 2019 opening range is in focus for EUR/USD as the NFP report is anticipated to show the U.S. economy adding another 180K jobs in December, but the updates may do little to snap the sideways price action as Average Hourly Earnings are expected to narrow to 3.0% from 3.1% per annum in November. Post this attention may turn to Federal Reserve Chairman Jerome Powell as the central bank head is slated to hold a joint interview with former-Fed Chairs Janet Yellen and Ben Bernanke, and the fresh rhetoric may influence the near-term outlook for the U.S. dollar as the Federal Open Market Committee (FOMC) now thinks ‘it is more likely that the economy will grow in a way that will call for two interest rate increases”.

Fed Chair Speech to Decide Near Term Price Trend

However, Fed Fund Futures continue to highlight diminishing bets for higher borrowing-costs as the central bank is expected to keep the benchmark interest rate on hold throughout the first-half of 2019. Meanwhile Chairman Powell & Company are expected to come under pressure to conclude rate hikes ahead of schedule as the economic outlook remains clouded owing to threat of Sino-U.S Trade War. As a result, the ongoing shift in fiscal policy may force Fed officials to adopt a less-hawkish tone as Dallas Fed President Robert Kaplan now argues that the central bank ‘should not take any further action on interest rates, and waning expectations for a higher U.S. interest rates may continue to generate range-bound conditions for EUR/USD especially as the European Central Bank (ECB) endorses a wait-and-see approach after winding down its quantitative easing (QE) program. Meanwhile investors are on lookout for Euro area inflation update for short term profit opportunities.

As of writing this article, EUR/USD pair is trading at flat 1.1393 up by 0.01% on the day. When looking from technical perspective, the pair is expected to continue range bound price action with price range limited by boundaries of consolidative action over last two months. The EUR/USD pair traded near its daily highs by the end of the US session, finding short-term resistance in a bearish 20 SMA in the 4 hours chart, now above the 100 and 200 SMA which remain directionless. Despite some wild spikes both side of the board, the pair remains within familiar levels and without a certain longer-term trend. In the mentioned chart, technical indicators have corrected from extreme oversold readings but lost upward strength within negative ground, limiting the upward potential. Sustained gains above the 1.1420/30 region will give bulls an encouraging hint. Expected support and resistance for the pair are at 1.1385, 1.1350, 1.1310 and 1.1425, 1.1460, 1.1500 respectively.

 

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