EUR/USD forecast: Bears likely to aim 5-month old descending trend-channel support

The US Dollar continued gaining traction against its European counterpart and kept exerting downward pressure on the EUR/USD pair for the third consecutive session on Wednesday. The recent escalation in the US-China trade tensions showed no signs of easing after China threatened to restrict exports of rare earth elements, which coupled with rising concerns over the global growth outlook forced investors to take shelter in traditional safe-haven currencies, including the greenback. 

The global flight to safety was evident from the generalized decline in the global government bond yields. In fact, yields on the German 10-year bond extended its recent free fall and dropped to the lowest level since July 2016, which eventually had a rather negative effect on the shared currency. The common currency was further weighed down by concerns over a possible clash between the Euro-skeptic coalition government in Italy and the European Union. 

The pair finally settled near the lower end of its daily trading range, albeit managed to hold its neck above two-year lows set last week. In absence of any major market moving economic releases from the Euro-zone, Thursday's key focus will be on the prelim (second estimate) US Q1 GDP print, expected to show that the economic growth stood at 3.1% as against 3.2% estimated initially. The data will provide fresh clues about the state of the world's top economy, which might influence the near-term sentiment surrounding the USD and provide some meaningful directional impetus.

Meanwhile, the technical set-up remains in favor of bearish traders and hence, a follow-through slide, towards challenging the 1.1100 round figure mark, remains a distinct possibility. Sustained weakness below the mentioned handle might turn the pair vulnerable to extend the recent bearish trajectory towards testing a five-month-old descending trend-channel support, currently in the vicinity of the key 1.1000 psychological mark. 

On the flip side, immediate resistance is pegged near mid-1.1100s, above which a bout of short-covering might assist the pair to aim back towards reclaiming the 1.1200 handle. The latter coincides with 50-day SMA and should act as a key barrier, which if cleared might lift the pair beyond the 1.1235 intermediate resistance towards testing the descending channel resistance near the 1.1275-80 region.

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.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD remains depressed but off daily lows

The EUR/USD pair is recovering from a daily low of 1.1216, although holding in negative territory for the day. US preliminary Michigan Consumer Sentiment Index improved by less-than-anticipated in July, coming in at 98.4 vs. the 98.5 expected.


GBP/USD trading marginally lower daily basis but above 1.2500

The Pound gave back some of its Thursday’s gain on dollar’s relief. The GBP/USD pair broke a daily descendant trend line coming from June’s high and holds above it, leaving little room for sellers to act.


USD/JPY: bears pausing, still in control

Japanese National Inflation steady at 0.7%YoY in June. US Michigan Consumer Sentiment Index expected at 98.5 in July. USD/JPY corrective advance falling short of signaling an interim bottom in place.


Something has spooked the Fed

We wish we knew what it is. Wild talk of the US joining Japan and Europe with zero or negative return on the 10-year is or should be very frightening.

Read more

Gold consolidates around $ 1440, eyes US data for fresh direction

Gold (futures on Comex) extends its side-trend around the 1440 mark into the mid-European session, having stalled its retreat from 2019 highs of 1454 near 1437 region.

Gold News