EUR/USD Forecast: Upside remains capped at 100-DMA ahead of ECB minutes

The EUR/USD pair had some good two-way price moves on Wednesday and was solely influenced by the US dollar price dynamics. Fresh concerns over US-China relations weighed on the global risk sentiment and initially benefitted the greenback's perceived safe-haven status against its European counterpart. It is worth recalling that the US President Donald Trump threatened to raise tariffs if phase one of a trade deal is not signed. Tensions between the two sides intensified after the US Senate unanimously passed the Hong Kong Humans Right and Democracy Act bill on Tuesday.

Focus shifts to ECB minutes

The pair dropped to the vicinity of mid-1.1000s but managed to recover the early lost ground amid some renewed USD selling bias. The buck remained on the defensive after the Fed released minutes of its latest monetary policy meeting held on October 29-30. The minutes revealed that most members judged that the monetary easing was enough to support growth, albeit they continued to see downside risks to the economic outlook. Most policymakers said the rate cut was appropriate due to global weakness. The minutes turned out to be a non-event and did little to provide any meaningful impetus to the major.
 
The pair finally ended with modest losses, snapping four consecutive days of winning streak, and held steady through the Asian session on Thursday. The market focus now shifts to the minutes of the European Central Bank's (ECB) October policy meeting, which might influence the shared currency and produce some short-term trading opportunities. The key focus, however, will remain on Friday's prelim Euro-zone PMI prints, which coupled with the ECB President Christine Lagarde's scheduled speech might provide a fresh directional impetus.

Short-term technical outlook

From a technical perspective, nothing has changed much the pair and hence, it will be prudent to wait for a sustained move beyond the 100-day SMA barrier before positioning for any further near-term appreciating move. The mentioned hurdle is closely followed by 23.6% Fibonacci level of the 1.0879-1.1180 move up, around the 1.1100-10 region, above which the pair seems all set to aim towards testing the 1.1170-80 supply zone (double-top resistance) en-route the 1.1200 round figure mark.
 
On the flip side, any meaningful pullback might continue to find some support near the 1.1045 region (50-day SMA) ahead of 50% Fibo. level around the 1.1030 area, which should now act as a key pivotal point for short-term traders. Failure to defend the said support levels might turn the pair vulnerable to head back towards challenging the key 1.10 psychological mark. Some follow-through weakness below the 1.1000-1.0990 region (61.8% Fibo.) is likely to accelerate the fall further towards the 1.0955-50 region before the pair eventually drops to the 1.0900 round-figure mark.