EUR/USD Forecast: Bearish bias remains; fall to 1.12 mark still looks a distinct possibility
|The EUR/USD pair continued with its two-way price-action on Thursday and finally ended the day with modest gains, comfortably above the 1.1300 round figure mark. The uptick lacked any obvious catalyst and could be solely attributed to cross-driven strength, stemming out of a sharp upsurge in the EUR/GBP cross in wake of the latest political turmoil in the UK.
The up-move, however, seemed lacking strong conviction/follow-through and remained capped amid a goodish pickup in the US Dollar demand. The already stronger greenback got an additional boost following the release of upbeat US monthly retail sales data and better-than-expected NY Empire State Manufacturing Index, which largely offset a slight disappointment from Philly Fed Manufacturing Index.
The pair added to overnight modest gains and ticked higher through the Asian session on Friday, holding closer to weekly tops ahead of the final Euro-zone CPI print for the month of October. Meanwhile, the US economic docket, featuring the second-tier releases of Industrial Production and Capacity Utilization data for October, seems unlikely to provide any meaningful impetus. Hence, the pair now seems more likely to enter a consolidation phase and oscillated in a narrow trading range on the last trading day of the week.
From a technical perspective, the pair has been steadily recovering along an ascending trend-channel formation on the 1-hourly chart and the immediate upside resistance is pegged near the 1.1370 region. A follow-through buying has the potential to lift the pair beyond the 1.1400 handle, towards testing its next resistance, currently near the 1.1430 region. The mentioned hurdle coincides with a descending trend-channel on a slightly higher time-frame and hence, is likely to keep a lid on any subsequent up-move.
On the flip side, the 1.1300 handle now seems to protect the immediate downside, which if broken is likely to accelerate the slide towards the 1.1250-45 horizontal support before the pair eventually breaks through YTD lows, around the 1.1215 level, and aim towards challenging the descending trend-channel support, currently near the 1.1200 round figure mark.
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