EUR/USD Forecast: Scope for an extension of the gradual decline
|The EUR/USD pair had good two-way moves on Thursday but and lacked any firm directional bias and finally ended nearly unchanged for the day. Softer than expected monthly US CPI print helped the pair to bounce off weekly lows, albeit the up-move fizzled out ahead of the 1.1700 handle following upbeat comments by the Fed chair Jerome Powell.
During a radio interview on Thursday, Fed's Powell said that the economy is in a “good place” at the moment with low unemployment and inflation rising toward the central bank's optimal range. Powell did raise concerns over rising trade tensions but did little to dampen expectations of possibly two more interest-rate hikes by the end of this year. The same was evident from a modest uptick in the US Treasury bond yields, which underpinned the greenback and eventually kept a lid on any meaningful up-move for the major.
The buck remained buoyant near two-week tops and kept exerting some downward pressure through the Asian session on Friday. In absence of any major market moving economic releases, the USD price dynamics might continue to act as an exclusive driver of the pair's momentum on the last trading day of the week.
From a technical perspective, Wednesday's break below a short-term ascending trend-channel formation on the 4-hourly chart pointed to the end of recent corrective bounce from YTD lows. Hence, a follow-through weakness, led by some fresh technical selling/long-unwinding pressure, now looks a distinct possibility.
Immediate support is pegged near 1.1630 area and is followed by the 1.1600 handle, below which the pair might aim back towards challenging the key 1.1500 psychological mark with some intermediate support near the 1.1550 horizontal zone.
On the flip side, any meaningful up-move might continue to face stiff resistance near the 1.1690-1.1700 region, above which a bout of short-covering might provide a minor lift but the up-move seems more likely to be capped at the next major hurdle near mid-1.1700s.
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