EUR/USD Forecast: Bulls at the mercy of USD price dynamics, 1.1800 mark holds the key
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UNLOCK OFFER- EUR/USD shot to two-week tops on Monday, albeit struggled to find acceptance above 1.1900 mark.
- Upbeat US Markit PMI prints prompted some USD short-covering and exerted pressure on the pair.
- Bulls, so far, have managed to defend the 1.1800 mark, which should now act as a key pivotal point.
The EUR/USD pair had good two-way price swings on the first day of a new trading week and the intraday volatility was exclusively sponsored by sentiment surrounding the US dollar. Further reports of successful COVID-19 vaccine trials revived hopes for a speedy global economic recovery and boosted investors' confidence. This was evident from the upbeat mood across the global equity markets, which undermined safe-haven assets and kept the USD bulls on the defensive through the first half of the trading action on Monday. The greenback was also pressured by speculations that the Fed might ease monetary policy further amid concerns about the economic fallout from the continuous surge in new coronavirus cases, which assisted the pair to gain some positive traction.
The uptick seemed rather unaffected by data, which showed that the introduction of new lockdown measures to combat the rising tide of COVID-19 infections has had a disruptive impact on the region's economic activity. In fact, the Eurozone Manufacturing PMI dropped to a three-month low level of 53.6 in November. Adding to this, the gauge for the services sector and the composite PMI plunged to six-month lows and came in at 41.3 and 45.1, respectively. Separately, the German Manufacturing PMI eased to 57.9 in November from 58.2 previous and Services PMI fell to 46.2 (six-month low) from October's final reading of 49.6. Nevertheless, the pair climbed to two-week tops, albeit struggled to find acceptance above the 1.1900 round mark.
The pair witnessed a dramatic intraday turnaround on the back of resurgent USD demand following the release of the preliminary estimates of Markit PMIs for November. The flash version of the US Manufacturing PMI unexpectedly jumped to a 74-month high level of 56.7 and Services PMI rose to 57.7 – a 68-month high – from 56.9 previous. This, along with a strong rebound in the US Treasury bond yields extended some additional support to the greenback and contributed to the pair's sharp intraday pullback of over 100 pips. The pair dived to over one-week lows but managed to find decent support near the 1.1800 mark and finally settled with only modest losses.
Meanwhile, news that the US President-elect Joe Biden was given the go-ahead to begin his White House transition added to an already upbeat market mood. This, in turn, prompted some fresh selling around the USD and assisted the pair to build on the overnight bounce. The pair moved back above mid-1.1800s as the focus now shifts to the release of the final version of the Eurozone GDP report for the third quarter of 2020. Apart from this, the German IFO Survey and a scheduled speech by the ECB President Christine Lagarde will influence the shared currency. Later during the early North American session, the release of the Conference Board's US Consumer Confidence Index and Richmond Manufacturing Index will also be looked upon for some meaningful trading opportunities.
Short-term technical outlook
From a technical perspective, the overnight steep decline dragged the pair below support marked by the lower boundary of a short-term ascending trend-channel. However, the subsequent rebound warrants some caution for bearish traders. This makes it prudent to wait for some follow-through selling below the overnight swing lows, around the 1.1800 mark, before positioning for any further depreciating move. The pair might then accelerate the fall towards the 1.1750-45 support zone. A convincing break below will negate any near-term bullish bias and turn the pair vulnerable to weaken further below the 1.1700 mark, towards testing the 1.1625 intermediate support en-route the 1.100 mark.
On the flip side, the 1.1880-90 region might continue to act as immediate strong resistance and is followed by monthly swing highs, around the 1.1920 region. Above the mentioned hurdle, the pair is likely to aim back to reclaim the key 1.2000 psychological mark. A subsequent move beyond YTD tops, around the 1.2010 region, should pave the way for an extension of the upward trajectory and push the pair towards the 1.2065-75 intermediate resistance before the pair eventually darts to the 1.2100 round-figure mark.
- EUR/USD shot to two-week tops on Monday, albeit struggled to find acceptance above 1.1900 mark.
- Upbeat US Markit PMI prints prompted some USD short-covering and exerted pressure on the pair.
- Bulls, so far, have managed to defend the 1.1800 mark, which should now act as a key pivotal point.
The EUR/USD pair had good two-way price swings on the first day of a new trading week and the intraday volatility was exclusively sponsored by sentiment surrounding the US dollar. Further reports of successful COVID-19 vaccine trials revived hopes for a speedy global economic recovery and boosted investors' confidence. This was evident from the upbeat mood across the global equity markets, which undermined safe-haven assets and kept the USD bulls on the defensive through the first half of the trading action on Monday. The greenback was also pressured by speculations that the Fed might ease monetary policy further amid concerns about the economic fallout from the continuous surge in new coronavirus cases, which assisted the pair to gain some positive traction.
The uptick seemed rather unaffected by data, which showed that the introduction of new lockdown measures to combat the rising tide of COVID-19 infections has had a disruptive impact on the region's economic activity. In fact, the Eurozone Manufacturing PMI dropped to a three-month low level of 53.6 in November. Adding to this, the gauge for the services sector and the composite PMI plunged to six-month lows and came in at 41.3 and 45.1, respectively. Separately, the German Manufacturing PMI eased to 57.9 in November from 58.2 previous and Services PMI fell to 46.2 (six-month low) from October's final reading of 49.6. Nevertheless, the pair climbed to two-week tops, albeit struggled to find acceptance above the 1.1900 round mark.
The pair witnessed a dramatic intraday turnaround on the back of resurgent USD demand following the release of the preliminary estimates of Markit PMIs for November. The flash version of the US Manufacturing PMI unexpectedly jumped to a 74-month high level of 56.7 and Services PMI rose to 57.7 – a 68-month high – from 56.9 previous. This, along with a strong rebound in the US Treasury bond yields extended some additional support to the greenback and contributed to the pair's sharp intraday pullback of over 100 pips. The pair dived to over one-week lows but managed to find decent support near the 1.1800 mark and finally settled with only modest losses.
Meanwhile, news that the US President-elect Joe Biden was given the go-ahead to begin his White House transition added to an already upbeat market mood. This, in turn, prompted some fresh selling around the USD and assisted the pair to build on the overnight bounce. The pair moved back above mid-1.1800s as the focus now shifts to the release of the final version of the Eurozone GDP report for the third quarter of 2020. Apart from this, the German IFO Survey and a scheduled speech by the ECB President Christine Lagarde will influence the shared currency. Later during the early North American session, the release of the Conference Board's US Consumer Confidence Index and Richmond Manufacturing Index will also be looked upon for some meaningful trading opportunities.
Short-term technical outlook
From a technical perspective, the overnight steep decline dragged the pair below support marked by the lower boundary of a short-term ascending trend-channel. However, the subsequent rebound warrants some caution for bearish traders. This makes it prudent to wait for some follow-through selling below the overnight swing lows, around the 1.1800 mark, before positioning for any further depreciating move. The pair might then accelerate the fall towards the 1.1750-45 support zone. A convincing break below will negate any near-term bullish bias and turn the pair vulnerable to weaken further below the 1.1700 mark, towards testing the 1.1625 intermediate support en-route the 1.100 mark.
On the flip side, the 1.1880-90 region might continue to act as immediate strong resistance and is followed by monthly swing highs, around the 1.1920 region. Above the mentioned hurdle, the pair is likely to aim back to reclaim the key 1.2000 psychological mark. A subsequent move beyond YTD tops, around the 1.2010 region, should pave the way for an extension of the upward trajectory and push the pair towards the 1.2065-75 intermediate resistance before the pair eventually darts to the 1.2100 round-figure mark.
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