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EUR/USD Rate Eyes 2018-Low as Bullish Series Snaps

The failed attempt to test the monthly-high (1.1500) keeps EUR/USD vulnerable to further losses as it struggles to preserve the bullish sequence from the previous week.

EUR/USD extends the rebound from the yearly-low (1.1216) as fresh comments from Federal Reserve officials rattle bets for above-neutral interest rates, but the failed attempt to test the monthly-high (1.1500) keeps the exchange rate vulnerable to further losses as it struggles to preserve the bullish sequence from the previous week.

The recent advance in EUR/USD appears to be stalling ahead of the European Central Bank’s (ECB) account of the October meeting, with the transcript having the potential to generate headwinds for the Euro as the Governing Council remains in no rush to move away from the zero-interest rate policy (ZIRP).

Even though the quantitative easing (QE) program is set to expire at the end of December, the ECB may refrain from altering the forward-guidance for monetary policy as euro-area interest rates are ‘expect them to remain at their present levels at least through the summer of 2019,’ and President Mario Draghi & Co. may attempt to run the clock at the last 2018-meeting on December 13 as the Governing Council struggles to achieve its one and only mandate for price stability.

In turn, little to no signs for an imminent shift in ECB policy may drag on EUR/USD throughout the remainder of the year, with recent price action raising the risk for a move back towards the 2018-low (1.1216) as the rebound unravels ahead of the monthly-high (1.1500). Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

EUR/USD Daily Chart

Image of eurusd daily chart

It looks as though the 1.1510 (38.2% expansion) region will keep EUR/USD capped as the rebound from the 2018-low (1.1216) sputters ahead of the November-high (1.1500). In turn, the 1.1220 (78.6% retracement) area sits on the radar, with the next downside hurdle coming in around 1.1140 (78.6% expansion).

For more in-depth analysis, check out the Q4 Forecast for the Euro

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Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2018.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.