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EUR/USD Price Forecast – EUR/USD Trades Flat Amid Lack of Trigger for Breakout in Either Direction

The EUR/USD pair had a rather lacklustre trading session on Thursday and remained confined within a broader trading range, largely unaffected by the latest ECB monetary policy update. The European Central Bank left interest rates unchanged, as was widely expected, and confirmed that it would wind down its QE programmed at the end of this month. The central bank maintained its forward guidance and reaffirmed that interest rates will remain at present levels at least through the summer of 2019. In the post-meeting press conference, ECB President Mario Draghi delivered a dovish shift and said that risks to the Euro-zone’s growth outlook remained broadly balanced but were shifting to the downside. The shared currency turned softer in reaction to the downbeat outlook, though the downside remained cushioned amid uncertainty over the Fed’s rate hike path in 2019, especially after the US President Donald Trump latest criticism.

Narrowing yield differentials and easing Italy concerns favor a bull breakout from fundamental perspective

In a Fox News interview on Thursday, Trump commented on the tightening policy and said that he hopes the Fed won’t raise interest rates anymore. Market participants, however, remain convinced that the central bank will raise its benchmark interest rate by 25bps  for a fourth and final time this year on Dec. 19. Hence, the key focus will be on the updated dot-plot, where the policymakers are expected to cut their forecast of 2019 rate increases and eventually help determine the pair’s next leg of a directional move. While the pair has been trading flat since Asian market hours, fundamental support seems to lean in favor of common currency as evident from the falling Italy-German yield spreads supported by easing Italy budget concerns. As of writing this article EURUSD pair is trading flat at 1.1360 down by 0.01% on the day.

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On release front today, European markets will see release of Manufacturing, Markit composite and Service PMI data updates and wages data for Q3 in Euro zone area. US market will see the release of Retail sales, Industrial production data and Manufacturing and Service PMI data updates. From a technical perspective, nothing seems to have changed for the pair and the risk remains tilted to the downside. A convincing break through a short-term ascending trend-line support, forming a part of a symmetrical triangle on the daily chart will reaffirm the bearish outlook and accelerate the slide back towards yearly lows, around the 1.1215 region. On the flip side, any meaningful up-move might continue to confront some fresh supply near the 1.1400 handle, coinciding with the symmetrical triangle resistance, and keep a lid on any runaway rally. However, a sustained move beyond the mentioned barrier, leading to a subsequent move beyond the 1.1425-30 resistance could prompt some short-covering move and assist the pair to aim towards reclaiming the key 1.1500 psychological mark.

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This article was originally posted on FX Empire

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