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EURUSD Likely to Fade Lower on Weak Data, Strong US Dollar

EURUSD Likely to Fade Lower on Weak Data, Strong US Dollar

Nick Cawley, Strategist

Euro, the US Dollar, and FOMC News:

  • EURUSD clinging on to 1.1300 but lower prices are likely.
  • FOMC to hike interest rates by another 0.25% as economy rumbles on.

We have just released our Brand New Q4 Trading Forecasts including USD and EUR.

EURUSD Set to Move Lower

The FOMC rate decision on Wednesday is the week’s major price point but releases out of Europe could have a bigger effect on EURUSD. Last week’s German ZEW reading’s disappointed while German and Europe PMI data missed across the board. This week we have German IFO data on Wednesday with expectations pointing to downside misses while on Friday, German and Euro-Zone consumer confidence will revealed, and again misses to the downside are expected.

While the economic backdrop in Europe continues to weaken, the FOMC on Wednesday will hike US interest rates by 0.25% for a fourth time this year, underpinning the strength in the US dollar. The US dollar basket trades just below its recent 18-month high and continues to respect the uptrend started in late-September.

US Dollar Index (May – December 17, 2018)

EURUSD remains just above 1.1300 but looks weak technically. The pair trade below all three moving averages and a break of the 1.1268 level leaves the recent 18-month low at 1.1216 vulnerable. The chart from late-September continues to show lower highs and a break to the downside is looking more likely.

EURUSD Weekly Technical Forecast: Euro Shorts in Charge of Triangle-Break.

EURUSD Daily Price Chart (April - December 17, 2018)

IG Client Sentiment Data show investors are currently 61.8% net-long EURUSD – a contrarian bearish signal – and in conjunction with recent daily and weekly sentiment shifts we get a stronger bearish EURUSD bias.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on EURUSD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.com or via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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