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Euro Price Forecast - Strong US Dollar Hampers EUR/USD Upside

Euro Price Forecast - Strong US Dollar Hampers EUR/USD Upside

Nick Cawley, Strategist

EUR/USD Price Forecast, Analysis and Chart:

EUR/USD Short-Term Outlook

Financial markets start the first full week of 2020 in a risk-off mode as tensions in the Middle East continue to weigh on investor sentiment. The US and Iran continue to ramp up the aggressive rhetoric, with both sides refusing to take a backward step after the US killed a top Iranian general in retaliation for the attack on the US embassy in Baghdad. The US dollar’s status as the go-to currency in times of trouble remains, along with the Japanese Yen and the Swiss France, and this underlying bid is capping any EUR/USD upside.

The final December German and Euro-Zone services and composite PMIs provided the single-currency with a small boost, with both German releases beating expectations by a healthy margin while the Euro-Zone data also beat on the upside.

German and Euro-ZOme PMI data releases for December

The technical set-up for EUR/USD remains clouded by geopolitics and the pair may struggle to print a fresh multi-month high (1.1240) in the short-term, the chart does reveal a bullish set-up of higher-highs and higher-lows off the October low. Near-term support from the 200-day moving average at 1.1128 should hold, before a cluster of old highs and lows either side of 1.1100 come into play. Both the downside and upside remain limited with a short-term range expected to hold.

EUR/USD Daily Price Chart (April 2019– January 6, 2020)

daily EUR/USD Price Chart

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 the Euro and the US Dollar – 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.comor via Twitter @nickcawley1.

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

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