EUR/USD forecast: Shows some resilience near 1.10 mark ahead of US CPI, Powell’s testimony

  • Renewed USD buying interest prompted some fresh selling on Tuesday.
  • Trump's not so optimistic trade-related comments did little to support.
  • The focus now shifts to the latest US CPI figures and Powell's testimony.

Following the previous session's modest uptick, the selling pressure around the shared currency returned on Tuesday and dragged the EUR/USD pair to fresh four-week lows near the key 1.10 psychological mark. Dovish comments by the ECB Executive Board member, Benoît Cœuré, saying that the QE program will remain in place for as long as needed, triggered the initial leg of the downtick. Meanwhile, traders seemed unaffected by a notable improvement in the German economic sentiment, rather took cues from some renewed US Dollar buying interest.
The greenback managed to regain some positive traction despite a mixed performance in the US bond market and was seen as one of the key factors exerting some fresh downward pressure on the major. However, investors remained cautious amid fading optimism over the possibility of a US-China trade deal, especially after the US President Donald Trump indicated over the weekend that he would only sign if it was the “right deal” for America. Trump on Tuesday further added that the US will increase tariffs on China in case the first step of a broader agreement isn’t reached.
The half-hearted overnight USD uptick quickly ran out of the steam during the Asian session on Wednesday and helped the pair to recover a bit, though the upside is likely to remain limited ahead of the latest US consumer inflation figures and the Fed Chair Jerome Powell's testimony before the Congress. Heading into the key data/event risk, the final German inflation figures might influence the common currency and contribute towards producing some short-term trading opportunities.

Short-term technical outlook

From a technical perspective, the pair has just managed to hold its neck above the 1.10 handle – support marked by 61.8% Fibonacci level of the 1.0879-1.1180 recent positive move. A convincing break below the mentioned support now seems to accelerate the fall further towards the 1.0955-50 region before the pair eventually drops to challenge the 1.0900 round-figure mark.
On the flip side, any attempted recovery might now confront some fresh supply near the 1.1030-40 confluence region, comprising of 50% Fibo. level and 50-day SMA, above which a bout of short-covering has the potential to lift the pair towards the double-top neckline support breakpoint and the 1.1100 handle. Momentum beyond the mentioned hurdles should pave the way for a further near-term recovery back towards the 1.1165-70 heavy supply zone.


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

Latest Forex Analysis

Editors’ Picks

AUD/USD rises above 50-HMA, bull reversal in the making?

The sell-off in AUD/USD seems to have run out of steam, courtesy easing RBA rate cut expectations after upbeat Australian CPI data. The pair trades above the 50-hour average. A close above 0.6765 would confirm a bullish reversal candlestick pattern on the daily chart. 


USD/JPY fills Monday's bearish gap ahead of Fed interest rate

USD/JPY has filled the gap created by Monday's negative open. Coronavirus fears have subsided in the last 24 hours, allowing recovery in USD/JPY. The respite could be short-lived if the Fed sounds dovish, sending the US dollar lower. 


Federal interest rate preview: Stable policy and an uncertain future

The course of the American economy has not altered since the previous FOMC meeting on Dec last year. 4Q growth is expected to be 2.1% when the preliminary figures are released by the Bureau of Economic Analysis on Thursday.

Read more

Gold: Bulls looking for a discount in $1560s

Gold top in the making with a weekly shooting star and weekly divergence. The price of gold has been found floundering between 1580 and the 1560s following a surge at the start of the year to the highest levels since March 2013 at $1,611.

Gold News

GBP/USD: 1.3080 questions break of short-term falling trendline

GBP/USD trades near 1.3025 during the early Wednesday’s trading session. The pair recently broke a three-day-old falling trend line but is still to cross the near-term key resistance confluence.


Forex Majors