• EUR/USD struggles for a firm near-term direction and remains confined in a familiar trading range.
  • Investors this week will eye Fed speaks and flash Eurozone PMIs for a fresh directional impetus.

The EUR/USD pair lacked any firm directional bias on Friday and seesawed between tepid gains/minor losses, well within a familiar trading range around mid-1.1800s. Concerns about the second wave of the COVID-19 infections and fading prospects of a sharp V-shaped economic recovery weighed on investors' sentiment. This was evident from a weaker trading sentiment around the equity markets, which coupled with Wednesday's not so dovish FOMC statement drove some haven flows towards the safe-haven US dollar. The greenback was further underpinned by the better-than-expected release of the preliminary Michigan Consumer Sentiment Index, which improved to 78.9 in September from 74.1 previous.

The supporting factors, to a larger extent, were negated by growing optimism over a potential vaccine for the highly contagious coronavirus disease. This coupled with worries that the lack of additional fiscal stimulus measures could halt the current US economic recovery held the USD bulls from placing any aggressive bets. This, in turn, failed to provide any meaningful impetus to the major and led to a subdued/range-bound price action. The pair finally settled nearly unchanged for the second consecutive week and formed a Doji candlestick pattern, indicating a tug of war between bulls and bears.

The pair managed to regain some positive traction on the first day of a new trading week as market participants now look forward the Fed Chair Jerome Powell's comments for a fresh impetus. Powell is also due to testify before the Congressional committees later this week, which, along with scheduled speeches by other influential FOMC members will influence the near-term USD price dynamics. Apart from this, traders will further take cues from Wednesday's release of the Eurozone preliminary PMI reports for September before positioning for the pair's next leg of a directional move.

Short-term technical outlook

From a technical perspective, the emergence of some dip-buying near 50-day SMA favours bullish traders. However, the lack of any strong follow-through buying warrants some caution before positioning for any further appreciating move. Hence, any subsequent positive move is more likely to confront a stiff resistance near the 1.1900 mark. That said, some follow-through buying might trigger some near-term short-covering move and push the pair further beyond the 1.1935-40 supply zone, towards reclaiming the key 1.2000 psychological mark.

On the flip side, the 1.1800 mark now seems to have emerged as immediate support, below which the pair could slide back to the 1.1750 horizontal level. Sustained weakness below, leading a subsequent break through the 1.1735 area (50-DMA), will be seen as a fresh trigger for bearish traders. The pair could then accelerate the fall further towards August monthly swing lows, around the 1.1700-1.1695 region. Failure to defend the 1.1700 mark would now turn the pair vulnerable to prolong the recent corrective slide towards testing the 1.1600 round-figure 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

GBP/USD tumbles from the highest since 2018 on the Brexit impasse

The GBP/USD roller coaster continues with a downfall below 1.35 after the pair hit a 31-month high of 1.3539 earlier. Brexit talks have yet to yield an agreement. Negotiations are set to continue through the weekend.

GBP/USD News

EUR/USD battles 1.2150 after disappointing NFP

EUR/USD is trading off the 32-month highs amid bumps in US stimulus and vaccine distribution. Markets await the all-important US Nonfarm Payrolls missed expectations with 245K jobs gained in November. 

EUR/USD News

XAU/USD fails to break $1850 and turns to the downside

Gold peaked after the beginning of the American session at $1848/oz reaching the highest level since November 23 and then turned to the downside. It bottomed at $1829 and is it about to end the week hovering around $1830.

Gold news

Dollar downfall explained and what's next for markets

The safe-haven US dollar is hitting multi-month and multi-year lows against its peers while stocks are on fire. What is behind the risk-on rally? Valeria Bednarik, Joseph Trevisani, and Yohay Elam discuss markets' moving parts as 2020 nears its end.

Read more

Extra week of Black Friday!

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