EUR/USD Forecast: Sideways bound
|The EUR/USD is trading flat on Thursday with no major macro news scheduled for the day on the European side of the Atlantic, while the US building permits and housing starts are due later during the US session together with weekly initial jobless claims and Philadelphia manufacturing activity gauge.
The EUR/USD is trading in a corrective mode at around $1.2200 after peaking at $1.2332 on Wednesday after the Bundesbank President Jens Weidmann said that the market right to expect the deposit rate hike by mid-2019. With the Eurozone inflation subdued at 1.4% y/y in December, staying well below ECB’s inflation target, the spotlight has been recently taken by the ECB officials that influenced the markets.
Comment from the Banque de France Governor and the ECB Governing Council member Villeroy is seen as a verbal intervention with Villeroy saying that recent Euro appreciation is a source of uncertainty that requires monitoring because of its possible downward effects on imported prices and inflation. I warned of the ECB verbal intervention last week and it took four days for it to materialize. See details here.
The joint Bundesbank and IMF conference going on in Frankfurt today is another opportunity for the ECB policymakers to talk the Euro down, especially for the ECB executive board member Benoit Cœuré who is scheduled to speak at the Bundesbank event at 14:30 GMT today.
My view is that the EUR/USD entered corrective mode trading sideways and with lack of fundamentals sentiment is taking over and driving the market.
In terms of technical perspective, the oscillators including the Relative Strength Index and Momentum are pretty neutral with Slow Stochastics nearing the Overbought territory. The Relative Strength Index and Momentum are pointing downwards, favoring the corrective move sideways on EUR/USD.
EUR/USD 15-minute chart
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