EUR/USD Forecast: pared losses, but upward potential limited

Valeria Bednarik FXStreet

The EUR/USD pair is trying to recover from a low set at 1.1865 during Asian trading hours, pressuring the 1.1900 early Europe. Speculation that the US government will now focus on the tax reform, expected to present a draft by the end of the month, backed a USD rally on Wednesday, resulting also in Wall Street reaching record highs. The momentum in equities, however, eased on Chinese soft data released overnight, giving some relief to the common currency.

No relevant news are coming from the EU today, but the US will release its August final inflation figures later today, expected to make big noise ahead of the upcoming Fed's meeting next week. Inflation has been stubbornly low this year, being the main reason why a fourth rate hike in the US disappeared and chances of a third one were drastically reduced. A negative outcome, therefore, should put the greenback under pressure.

In the meantime, the pair struggles around 1.1900, with limited upward potential in the 4 hours chart, as the price remains well below its 20 and 100 SMAs, with the shortest heading south around 1.1950 and offering a dynamic resistance, while technical indicators are bouncing from oversold levels still well below their mid-lines and with limited upward strength.

Above 1.1920 the pair can recover up to the 1.1950/60 region, while beyond this last, an approach to 1.2000 seems possible. Below the daily low, on the other hand, 1.1822, last week low, is the next bearish target, en route to 1.1795, a daily ascendant trend line coming from the 1.0600 price zone.

View live chart of the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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