EUR/USD Forecast: bullish but with limited upside, focus shifts to Draghi’s speech

The US Dollar stayed generally weak through Asian session on Thursday as investors digested the latest FOMC meeting minutes, which had nothing new of great importance to drive the market. Although the overall view about a December rate hike remained intact, the minutes revealed that low inflationary environment weighed on policymakers' minds. Meanwhile, easing Spanish political uncertainty provided an additional boost to the shared currency and helped the EUR/USD pair to move past 50-day SMA hurdle to its highest level since September 25. 

With no key economic data due from the Euro-zone, the release of US PPI and weekly jobless claims would be looked upon for some short-term trading opportunities. The key focus, however, would be on a panel discussion about monetary policy, where comments from the ECB President Mario Draghi, Fed Governors Lael Brainard and Jerome Powell, should infuse some volatility in the FX market. News regarding the US President Donald Trump's tax plan would also be looked upon for some immediate respite for the USD bulls. 

From a technical perspective, the pair's recovery move from an important support near the 1.1675-70 region, within a short-term ascending trend-channel formation on hourly chart, might now confront resistance near 1.1880-85 area. The mentioned hurdle comprises of the short-term ascending channel resistance and 50% Fibonacci retracement level of the pair's recent corrective slide. 

Hence, the pair runs the risk of correcting back towards the trend-channel support near the 1.1835-30 region, also nearing 38.2% Fibonacci retracement level. A convincing drop below the mentioned support would invalidated the up-move and turn the pair vulnerable to break below the 1.1800 handle and head towards testing 23.6% Fibonacci retracement level support near 1.1770 area.

Alternatively, a clear break through 1.1880-85 barrier would indicate a fresh bullish break out and could lift the pair beyond the 1.1900 handle towards its next major resistance around 1.1940 horizontal level.