EUR/USD Forecast: Going nowhere in a hurry, German macro data eyed for some impetus

The US dollar came under some renewed selling pressure on the first day of a new trading week and assisted the EUR/USD pair to gain positive traction. The global risk sentiment got a strong lift from positive news on a potential vaccine and treatment for the highly contagious coronavirus disease. The upbeat market mood undermined the greenback's relative safe-haven status and was seen as one of the key factors behind the pair's modest intraday uptick.

The Financial Times reported that the Trump administration is considering fast-tracking an experimental COVID-19 vaccine being developed by AstraZeneca and Oxford University for use in the United States ahead of the November 3 elections. Adding to this, the US Food and Drug Administration (FDA) on Sunday said that it has issued emergency authorization to use blood plasma from recovered patients to treat certain patients suffering from the COVID-19 virus.

Meanwhile, the intraday USD weakness remained limited as investors refrained from placing aggressive bets ahead of a speech by the Fed Chair Jerome Powell at the Jackson Hole symposium later this week. This coupled with a goodish bounce in the US Treasury bond yields extended some additional support to the greenback and capped the pair, instead led to an intraday pullback of around 65 pips. The pair finally settled nearly unchanged for the day, just below the 1.1800 mark.

On the trade-related front, the US Trade Representative’s Office said in a statement that both the US and China see progress made on resolving issues in phase one trade deal between the two countries. The development further boosted investors' confidence and helped the pair to catch some fresh bids during the Asian session on Tuesday. Despite the two-way price moves over the past 24-hours, the pair remains bounded well within the last week’s trading range, awaiting breakout.

Market participants now look forward to the release of the final German GDP print for the second quarter of 2020 and the closely-watched German Ifo sentiment survey. A softer reading will be seen as early signs that the Eurozone economic recovery is losing momentum and pave the way for an extension of the recent corrective slide from two-year tops. Later during the early North American session, the release of the Conference Board's US Consumer Confidence Index will also be looked upon for some meaningful trading opportunities.

Short-term technical outlook

From a technical perspective, nothing seems to have changed much and the pair is more likely to prolong its consolidative price action. Hence, any meaningful slide is more likely to find decent support near last week’s swing low, around the 1.1755 region. Some follow-through weakness might turn the pair vulnerable to accelerate the fall back towards testing sub-1.1700 level, or monthly lows set on August 3.

On the flip side, the 1.1850-60 region now seems to have emerged as an immediate hurdle, above which bulls are likely to aim for a move beyond the 1.1900 mark. A subsequent positive move has the potential to lift the pair further towards the 1.1940-50 supply zone, above which the momentum could further get extended towards the key 1.2000 psychological mark.