EUR/USD Forecast: bearish bias remains, recovery likely to be capped near mid-1.1600s
|The EUR/USD pair built on its post-ECB minor corrective bounce and ended higher for the second consecutive session, in a rather subdued trading action on Monday. The US Dollar bulls held on the defensive amid escalating US-China trade tensions and eventually extended some support to the major. China retaliated to the latest round of US tariffs of 25% on around $50 billion worth of Chinese imports by slapping duties on high-value American export products and suspending all previous trade agreements with Trump's administration.
Trade fights between the world's two largest economies remained a dominant theme in the market after the US President Donald Trump threatened to impose a 10% tariff on $200 billion of Chinese goods, taking the two powers a step closer to a full-blown trade war. The pair, however, has failed to capitalize on the broader USD weakness and has held with only modest gains just above the 1.1600 handle.
From a technical perspective, the pair has found acceptance above 23.6% Fibonacci retracement level of its post-ECB slump but any subsequent up-move seems more likely to be capped near the 1.1650-60 confluence region, comprising of 38.2% Fibonacci retracement level and 100-hour SMA.
On the flip side, the 1.1610-1.1600 region now seems to protect the immediate downside, which if broken might accelerate the fall back towards 1.1570 horizontal support. A follow-through weakness might turn the pair vulnerable to head back towards retesting the key 1.1500 psychological mark, or 10-month lows set on May 29th.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.