EUR/USD Forecast: Vulnerable below 1.1400 handle, flash Euro-zone PMIs eyed for some impetus
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The EUR/USD pair lacked any firm directional bias and seesawed between tepid gains minor losses through Wednesday's trading session. The pair managed to reverse an early dip to an intraday low level of 1.1325 and rallied to fresh two-week tops amid some renewed US Dollar weakness, led by a follow-through slide in the US Treasury bond yields. The pair, however, failed to capitalize on the positive move and started losing momentum following the release of the latest FOMC meeting minutes, which showed that there was no consensus over the rate hike path for 2019.
Division among the policymakers with regards to future rates policy surprised the market and provided a minor lift to the greenback. This coupled with growing concerns about the health of Euro-zone economy, reaffirmed by IMF Lagarde's comments that indicated a likely downgrade German growth's forecast, further weighed on the shared currency and collaborated towards keeping a lid on any meaningful up-move.
The pair managed to regain some positive traction during the Asian session on Thursday as market participants now look forward to the flash German and Euro-zone PMI prints for some fresh impetus. Even a slightest of disappointment will be enough to further alleviate recession fears and trigger a fresh wave of selling pressure. Later during the early North-American session, the release of US durable goods orders data will influence the USD price dynamics and also produce some meaningful trading opportunities.
From a technical perspective, nothing seems to have changed for the pair except that the overnight retracement reaffirmed persistent selling bias at higher levels. With technical indicators on hourly/daily charts already losing positive momentum, any subsequent up-move seems more likely to remain capped at 50-day SMA, around the 1.1385 region. A convincing break through the mentioned barrier might trigger a short-covering rally and lift the pair further towards retesting near five-month-old descending trend-line hurdle, currently near the 1.1460 region.
On the flip side, the 1.1325 level, closely followed by the 1.1300 handle might continue to protect the immediate downside, which if broken would accelerate the fall further towards the 1.1260-55 horizontal support. A follow-through selling will reinforce the bearish outlook and drag the pair back towards multi-month lows, around the 1.1215 region. The downward trajectory could further get extended, even below the 1.1200 handle, towards testing its next major support near mid-1.1100s.
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