The EURUSD pair yesterday saw rangebound price action that closed on a dovish note. The decline in European equities, easing optimism surrounding Sino-U.S. trade talks which caused risk appetite to decline and dovish macro data from the EU are the major reason for Euro’s decline in the broad market. However, hopes for positive progress on Brexit front continued to provide some level of positive support underpinning market bulls preventing sharp declines resulting in dovish price action but a low amount of loss in the European equity market. However, the Euro saw steady declines and went as low as $1.1205 post which the common currency began its rebound activity.
Geo-Political Issues Remain Major Driving Force
Risk appetite remained high in Asian market hours as investors who took to profit booking activities and cautious stance began to place speculative bets albeit in a small volume. This helped EURO slowly head towards mid-1.12 handle in Asian market hours. While the release of ECB meeting minutes didn’t add anything new to price action, it re-affirmed MPC members dovish comments from last month’s interest rate decision press conference. This has effectively created a strong resistance at mid 1.12 handle preventing sharp gains to the upside. As of writing this article, EURUSD pair is trading at 1.1227 up by 0.07% on the day.
Moving forward, investors await headlines on Sino-U.S. trade talks and Brexit progress for clarity of future proceedings which will dictate directional bias of the pair in medium to long term. However, in immediate future investors wait for macro data updates which will provide short term price movement cues and profit opportunities. On the release front today, the European calendar sees the release of second tier data updates while the US calendar sees the release of first tier data updates. European calendar will see the release of German industrial production data while the US calendar will see the release of Non-farm Payroll data, Unemployment rate, and Average hourly earning index data update. In immediate future, the pair remains trapped within a range of 1.1200 to 1.1250 handle which needs to be breached on either side for a breakout that would facilitate next leg of the rally to materialize and today’s NFP update from the US could likely trigger such a move.
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