Market Overview

EUR/USD Forecast: Might Struggle To Move Past 50-DMA Hurdle, Despite Easing Catalan Fears

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The EUR/USD pair extended its steady up-move for the fourth consecutive session on Wednesday amid fading risk of Catalonia independence. Addressing the regional parliament in Barcelona, Catalan President Carles Puigdemont refrained from making a formal declaration of independence and called for negotiations with Spain.

Meanwhile, uncertainty over the US President Donald Trump's proposed tax overhaul plans kept the US Dollar bulls on the back-foot and supported the pair's up-move to fresh two-week highs during early European session on Wednesday.

However, a strong pickup in the US Treasury bond yields kept a lid on any strong follow-through momentum. Moreover, investors also seemed to refrain from placing aggressive bets ahead of the publication of FOMC meeting minutes, later during the NY trading session.

With December Fed rate hike action nearly priced in the market, investors would look for reaffirmation of the central bank's hawkish stance through 2018. Signals over the Fed's commitment to continue raising interest rates gradually should provide a fresh boost to the greenback and stall the pair's ongoing recovery move from nearly two-month lows touched in the aftermath of Friday's US monthly jobs report.

Even from a technical perspective, any further up-move is likely to confront fresh supply at the 50-day SMA, currently near the 1.1845 region. Failure to break through this immediate strong hurdle and a subsequent retracement back below the 1.1800 round figure mark would point to a resumption of the pair’s prior depreciating slide.

Below the mentioned handle, the pair is likely to accelerate its slide towards the 1.1760 intermediate level before eventually heading back towards the 1.1700 mark and an important support near the 1.1675-70 region.

Alternatively, a convincing break through the 50-day SMA barrier would negate any near-term bearish bias and lift the pair back above the 1.1900 handle towards its next major hurdle near the 1.1940 region.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Forex Markets

 

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