• Better-than-expected Euro-zone data provided some intraday lift on Wednesday.
  • The uptick quickly ran out of the steam amid not so optimistic trade headlines.

Following an early failed attempt to retake the 1.1100 handle, the EUR/USD pair met with some supply on Wednesday and finally settled near the lower end of its daily trading range. The final Euro-zone Services PMI prints for October came in better-than-expected, while retail sales also surprised to the upside and initially extended some support to the shared currency. However, the intraday uptick ran out of the steam after the IMF – in its Regional Economic Outlook report – downgraded Euro-zone growth and inflation forecasts for 2019 and 2020. IMF also urged that monetary policy should remain accommodative amid subdued inflationary pressures in most European economies.

Weighed down by renewed trade uncertainty

Meanwhile, the latest optimism over the “phase one” US-China trade deal faded rather quickly on reports that the agreement, which was hoped to be signed in mid-November, might be delayed until December. It was also reported that terms of the deal, regarding the size of China’s agricultural purchase and remove of some imposed tariffs, were still being negotiated. The news weighed on the risk sentiment and provided a modest lift to the US Dollar perceived safe-haven status against its European counterpart and further collaborated to the pair's late slide.
The pair remained depressed for the fourth consecutive session Thursday and dropped to fresh three-week lows during the Asian session. In absence of any major market-moving economic releases on Thursday, traders are likely to take cues from the European Commission's Economic Forecasts for the member states over the next 2 years. Apart from this, the incoming trade-related headlines might continue to influence the USD price dynamics and further contribute towards producing some meaningful trading opportunities.

Short-term technical outlook

From a technical perspective, the recent rejections from the 1.1175-80 supply zone constituted towards the formation of a bearish double-top pattern on the daily chart. The pair was now seen flirting with the neckline support near the 1.1070-60 region, which if broken might be seen as a key trigger for bearish traders. Below the mentioned support, the pair seems vulnerable to accelerate the slide further towards challenging the key 1.10 psychological mark with some intermediate support near the 1.1030-25 region.
On the flip side, any attempted bounce might continue to confront some fresh supply near the 1.1100 handle and is closely followed by 100-day SMA resistance near the 1.1120 region. A sustained move back above the said barrier might assist the pair to make a fresh attempt towards clearing the 1.1175-80 supply zone. A decisive breakthrough will negate the bearish set-up and set the stage for a move beyond the 1.1200 round-figure mark towards testing the 1.1230-35 intermediate resistance. The momentum could further get extended towards the 1.1275-80 region before the pair eventually aims towards reclaiming the 1.1300 handle.


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