EUR/USD Forecast: Remains vulnerable ahead of German CPI/US GDP
|The shared currency retained its bearish bias on Wednesday and was further weighed down by the ECB President Mario Draghi's dovish stance, saying that the central bank could further postpone a plan to raise lending rates if data continue to show contraction. The comments further drove buying of government paper, dragging the yield for Germany's 10-year bund deeper into negative territory - closer to is 2016 record low and affected negatively on the common currency.
On the other hand, the US Dollar managed to attract some buying interest during the early North-American session and was supported by better-than-expected US Trade Balance figures, showing that deficit narrowed to $51.1 billion in January. This coupled with a fresh wave of global risk-aversion trade, amid worrying signals of slowing global growth, provided an additional lift to the greenback's relative safe-haven status against its European counterpart.
The EUR/USD pair remained under some selling pressure for the fourth session in the previous five and extended its recent bearish trend from six-week tops set on March 20. The bearish pressure now seems to have eased, at least for the time being, as market participant now look forward to the release of prelim German CPI figures for some fresh impetus. Later during the early North-American session, the final Q4 US GDP print will influence the USD price dynamics and further collaborate towards producing some meaningful trading opportunities on Thursday.
From a technical perspective, the set-up remains in favor of further decline back towards challenging the 1.1200-1.1190 support area, representing 61.8% Fibonacci retracement level of the 1.0341-1.2556 up-move. A follow-through selling might turn the pair vulnerable to continue with its depreciating move towards testing a descending trend-line support near the 1.1100 round figure mark. The mentioned trend-line extends from lows testing in Aug. 2018 through Nov. 2018 swing low and should act as a key pivotal point for traders.
On the flip side, any meaningful up-move might continue to confront some fresh supply near the 1.1290-1.1300 region, which is followed by the 1.1325-30 supply zone. A convincing break through the mentioned hurdles now seems to trigger a short-covering bounce and lift the pair back towards retesting a six-month-old descending trend-line resistance, currently near the 1.1385 region.
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