EUR/USD Price Forecast: Euro Ekes Out Marginal Gains Ahead of ECB Minutes


EUR/USD TALKING POINTS

  • Greenback gives back to failing euro post-FOMC.
  • ECB minutes in focus.
  • EUR/USD attempting to close above key level to limit downside.

EURO FUNDAMENTAL BACKDROP

The euro has been under significant pressure ever since global recessionary fears gripped markets causing price to pierce through multi-decade lows. This morning, the euro clawed back some of its recent losses after the FOMC minutes yesterday saw Federal Reserve Chair Jerome Powell attempt to cool concerns around a global slowdown by highlighting their (Fed’s) preferred yield curve measure being the 3-month vs forward 3-month as opposed to the 2s10s curve emphasized by the wider market. This shorter term curve is yet to invert and given the euro some respite against a rampant dollar.

Later today, the ECB’s Monetary Policy Meeting Accounts will serve as the risk event for today and any hawkish slant could extend today’s bullish bias.

EUR/USD ECONOMIC CALENDAR

Source: DailyFX economic calendar

TECHNICAL ANALYSIS

EUR/USD DAILY CHART

eurusd daily chart

Chart prepared by Warren Venketas, IG

Price action on the daily EUR/USD chart above shows recent support at the 1.01615 level yesterday with the potential for limiting further downside should the daily candle close above the 1.0210 long-term inflection point. Should this come to fruition we may see another move higher towards the 2017 swing low at 1.0340. Bullish divergence has been invalidated on the Relative Strength Index (RSI) shown in green however, the weekly chart continues to display the prospect of upcoming bullish divergence. Medium-term I do favor a euro recovery towards 1.0500 but short-term remains uncertain.

Resistance levels:

Support levels:

IG CLIENT SENTIMENT DATA: MIXED

IGCS shows retail traders are currently LONG on EUR/USD, with 72% of traders currently holding long positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment however, recent changes in long and short positioning result in short-term hesitancy.

Contact and follow Warren on Twitter: @WVenketas





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