EUR/USD: bull-bear tug-of-war continues

The EUR bulls and the bears are fighting it out in a month-long narrowing price range.

The European Central Bank (ECB) dialed back its QE program yesterday but also downgraded the Eurozone inflation and growth forecasts. So, the first rate hike could be pushed out to 2020.

The bears are still struggling to score a victory over the bulls, possibly due to dovish Fed expectations and easing Italy budget concerns, as represented by the falling Italy-German yield spreads.

The prospects of a triangle breakdown, however, would improve if the preliminary German and Eurozone PMI numbers, scheduled for release today, print below estimates, validating ECB's view that the balance of risk is moving to the downside.

Not to forget, the dollar will likely pick up a strong bid if the US November retail sales better estimates, lifting the treasury yields higher.

It is worth noting that a triangle breakdown if confirmed, would open the doors for a break below the recent low of 1.1215. On the other hand, a triangle breakout could be seen if the US retail sales unexpectedly contract, boosting expectations of a Fed rate pause in 2019.

EUR/USD Technical Levels