EUR/USD Forecast: correcting lower, but 1.1260 still likely

Valeria Bednarik FXStreet

The EUR/USD pair retreated modestly after reaching yet another 2017 high overnight at 1.1171, pulling back to the high after a pretty much straight 300 pips rally, exacerbated after the pair retook the 1.1000 figure on Trump-Russia scandals. New headlines surged pretty much daily basis this week, an "impeachment" started sounding out loud on Wednesday, as the new US president could be charged with obstruction of justice, after he asked former FBI director to stop investigating Michael Flynn.

Risk aversion extended through the Asian session and persists during European trading hours, with stocks trading dip in the red, and continued demand for safe-havens gold and yen, which means the greenback has little chances of recovering further, and that the current downward movement is more likely a pause.

There are no major macroeconomic releases in the EU today, whilst the US will release its weekly unemployment figures, and the Philly manufacturing survey. Late on the US afternoon, ECB's Draghi will speak at the Tel Aviv University, but is quite unlikely he will be able to move the EUR, unless he changes his view on tapering.

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In the meantime, the 4 hours chart shows that technical indicators have partially corrected extreme overbought readings before turning flat, whilst the 20 SMA continued advancing below the current level, now around 1.1060. The daily low was set at 1.1121, with a break below favoring a downward correction towards 1.1060/80, where buying interest will likely re-surge. Beyond the mentioned daily high, the pair has scope to advance up to 1.1210 first, en route to a major long term resistance at 1.1260.

View live chart of the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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