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Market Overview

EUR/USD Forecast: Euro breaks out from triangle structure on the downside

  • While the broader sideways trend on EUR/USD is prevailing, the short-term breakout from the triangle structure indicates further US Dollar strength.
  • The Federal Reserve’s vice chairman Clarida repeated the language of Fed being “very patient” on rates as it will assess the economy meeting by meeting.
  • The ECB President Mario Draghi is expected to deliver the presentation of the ECB annual report before the European Parliament later on Tuesday.

The EUR/USD is trading little changed on the downside at around 1.1470 on Tuesday as lack of the fundamental data in the Eurozone and in the US see the risk-off mood stemming from  China’s trade data deterioration carry over.

The EUR/USD is in the consolidation phase after flash move below 1.1500 last Friday with little reason for the currency pair to move amid lack of the macro drivers. With the US government shutdown continuing, the major data like retail sales report is delayed while scheduled events including Empire State manufacturing report and the factory gate inflation being too little to move the market ahead.

On Monday, the US Federal Reserve vice chairman Richard Clarida was speaking to Fox Business saying that the December rate hike was a right thing to do while confirming the language of Fed being very patient with the future move on rates. Federal Open Market Committee will take policy decisions “meeting by meeting” as it sees that some global data has been softening.

The ECB President Mario Draghi is scheduled to speak in front of the European Parliament on Tuesday afternoon while presenting the ECB Annual Report, with the speech unlikely feature any important policy announcements. Kansas City Federal Reserve President Esther George voting at the FOMC in 2019 is also scheduled to speak later on the day. 

While the macro data scheduled for Tuesday are expected to have little-to-no-effect on the currency market, the risk-off sentiment and possibly wild market move on Sterling as the UK parliament is set to reject Theresa May’s Brexit deal are expected to support US Dollar and drag Euro lower. 

Technically the EUR/USD broke from the consolidation triangle on the downside while it is still moving within a sideways trend. The slide lower in the EUR/USD is a result of a risk-off sentiment stemming from the fear of global economy slowing down. The deteriorating outlook for the global growth sees safe havens including US Dollar benefitting. While the broader sideways trend is prevailing, the short-term breakout from the triangle structure indicates further US Dollar strength. 

EUR/USD 30-minutes chart



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Posted-In: EU EUR/USD euroNews Eurozone Global Federal Reserve Markets

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