Ekaterina Seredinskaya | Feb 08, 2019 14:02
The euro failed to receive a respite after a recent sell-off and remains under pressure on Friday.
EUR/USD has settled around 1.1340, trading with a mild bearish bias. In the weekly charts, the pair is within striking distance from the 200-week MA. This region capped the selling pressure on several occasions over the last few months, so a closure below this moving average will worsen the technical picture significantly.
The sentiment around the common currency continues to deteriorate. In its fresh forecasts, the the European Commission revised lower its prospects of economic growth for 2019 in Germany and the region in general to 1.1% from 1.8% and to 1.3% from 1.9%, respectively. Moreover, the Commission now expects inflation at 1.4% versus the previous estimate of 1.8%.
Against this backdrop and the latest disappointing macroeconomic data from the euro area, investors push back the ECB rate hike expectations further. If the central bank itself starts signalling a possible shift in its forward guidance, the prospects of shelving plans to hike rates in 2019 will hurt the euro quite dramatically.
Technically, EUR/USD needs to stay above the 200-week MA that is standing on the way to the 1.290 region, where January 24 lows lie. Should the 1.13 support withstand the pressure from the dollar bulls, the common currency could make some recovery attempts. However, the fundamental picture in the region coupled with trade war worries will prevent the high-yielding currency from a decent rebound in the short term.
Written By: Ekaterina Seredinskaya
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.