EUR/USD Forecast: Bulls might wait for a break through November highs, around 1.1920


  • EUR/USD staged a goodish intraday bounce from weekly lows amid renewed USD selling bias.
  • COVID-19 jitters, dovish Fed expectations, sliding US bond yields weighed on the greenback.
  • Mnuchin's decision to halt the Fed's emergency schemes exerted additional pressure on the buck.

Worries about the continuous surge in new coronavirus cases and its impact on the fragile global economic recovery weighed on investors' sentiment. This, in turn, drove some haven flows towards the US dollar and exerted some downward pressure on the EUR/USD pair through the first half of the trading action on Thursday. However, expectations of further monetary easing by the Fed, along with a fresh leg down in the US Treasury bond yields kept a lid on any runaway rally for the USD.

The pair managed to find decent support near the 1.1815 region and gained some traction following the release of rather unimpressive US macro releases. In fact, the US Initial Weekly Jobless Claims unexpectedly rose to 742K during the week that ended November 14 and the previous week's reading was also revised higher to 711K. Separately, the Philly Fed Manufacturing Index came in at 26.3 for November as compared to 22 expected, though marked a notable fall from 32.3 previous.

Apart from this, a late recovery in the US equity markets further undermined the safe-haven greenback and provided an additional boost to the major. The USD lost some additional ground after the US Treasury Secretary Steven Mnuchin told the Federal Reserve to return money earmarked for pandemic relief for struggling businesses, nonprofits and local governments. Mnuchin's decision added to market anxiety about the broader economic growth and prompted some fresh selling around the greenback.

The pair rallied around 65-70 pips from daily swing lows and finally settled near the top end of its daily trading range. The momentum extended through the Asian session on Friday, pushing the pair back closer to the top end of its weekly trading range. Friday's economic docket features the releases of German Producer Price Index for October and the EU Consumer Confidence for November. The data will be looked upon for some impetus amid absent relevant market-moving economic releases from the US.

Meanwhile, the anti-risk flow could extend some support to the buck and continue capping the upside for the major, at least for the time being. This makes it prudent to wait for some strong follow-through buying before traders start positioning for a further near-term appreciating move.

Short-term technical outlook

From a technical perspective, any subsequent move up is likely to confront resistance near monthly swing lows, around the 1.1920 region. A sustained move beyond will be seen as a fresh trigger for bullish traders and push the pair back towards reclaiming the key 1.2000 psychological mark. Some follow-through buying beyond YTD tops, around the 1.2010 region, should pave the way for an extension of the near-term upward trajectory. The pair might then accelerate the momentum towards the 1.2065-75 intermediate hurdle en-route the 1.2100 round-figure mark.

On the flip side, immediate support is now pegged near the 1.1850 horizontal zone. This is followed by the overnight swing lows, around the 1.1815 region and the 1.1800 mark. Failure to defend the mentioned support levels might prompt some technical selling and turn the pair vulnerable to slide further towards last week’s swing lows around the 1.1745 region. A convincing breakthrough will negate any near-term bullish bias and set the stage for a further near-term depreciating move, possibly towards testing the 1.1600 mark. 

fxsoriginal

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. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

AUD/USD: Bulls cheer risk-on mood to attack 0.7400 ahead of China PMI

AUD/USD stays positive, wavers between 0.7381 and 0.7392 off-late, around three-month high. Vaccine hopes, US dollar weakness favor the bulls, Brexit jitters, virus woes and Aussie-China tussle test the upside momentum.

AUD/USD News

USD/JPY: Off intraday high near 104.00 on upbeat Japan Industrial Production, Retail Sales

USD/JPY trims early-Asian gains, drops for the fifth consecutive day. Japan’s October month Retail Sales, Industrial Production prints upbeat results. China PMIs, risk catalysts to remain as the key drivers.

USD/JPY News

Gold: Vaccine hopes weigh on XAU/USD below $1,800

Gold fades late-Friday’s recovery moves from $1,774. The yellow metal fades the bounce off the early-July top, marked on Friday. Risk tone remains positive amid vaccine hopes, mixed clues over Brexit deal.

Gold news

WTI: March top lures the bulls as OPEC struggles over output hike

WTI keeps upside break of 61.8% Fibonacci retracement, nears highest in nine months. OPEC struggles to agree over output even as some participants back a delay in the production hike.

Oil News

Black Friday 2020 Discounts!

Learn to trade with the best! Don't miss the most experienced traders and speakers in FXStreet Premium webinars. Also if you are a Premium member you can get real-time FXS Signals and receive daily market analysis with the best forex insights!

More info

Forex Majors

Cryptocurrencies

Signatures