Yahoo Finance EUR/USD Daily Price Forecast – EUR/USD Steady at 1.16 Handle despite Hawkish Comments from Powell
The EUR/USD could see positive action on the last trading day of the week, having defended the key 20-day moving average (MA) support on Thursday. Fed’s Powell, during a radio interview yesterday, said the US economy is in a “really good place” and added good times will likely last for three years, courtesy of government tax and spending programs. Powell’s positive comments indicated the central bank is not particularly concerned about Trump’s trade war and will likely stick to its plan of raising rates at a faster pace. Still, the greenback failed to pick up a strong bid, allowing the EUR/USD to hold the 20-day MA support, currently seen at 1.1656. At press time, the currency pair was trading at 1.1665. The pair’s defense of the key MA support despite positive comments from Fed’s Powell could entice technical buyers, creating upward pressure on the EUR exchange rate.
EURUSD Steady
Further, the data calendar is light and the oversold Chinese Yuan is showing signs of life against the US dollar. Hence, there is enough room for a minor technical rally in the common currency. EUR/USD ended this Thursday virtually unchanged as the daily bar formed a doji, signaling indecision on both sides. After a doji, the market usually follows the path of least resistance. Since the week has seen lower highs and lower lows, odds favor a bearish continuation in long run. The Japanese yen and the Swiss franc are favored as safe-haven investments. But against the dollar, both have weakened in the past week as trade tensions between the United States and China have mounted. That suggests investors believe the greenback is better suited to withstand trade volatility, as a safe-haven investment or as a beneficiary of new policies.
The US Dollar is a trade deficit currency, as such if ongoing trade war helps reduce trade deficit and financial flow remains upbeat supported by Fed rate hikes and increase in local investments, the resulting flows are going to be positive for the dollar, at least relative to where they were. While fundamentals support probability of Common currency’s hike in short term, long term could see US dollar growing strong based on how geo-political events turn out. Expected support and resistance for the day are at 1.1640 / 1.1600 and 1.1690 / 1.1720 respectively.
This article was originally posted on FX Empire
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