Yahoo Finance EUR/USD Daily Price Forecast – EUR/USD Opens Flat on Widening US-DE Spread Difference amid Risk Averse Market Situation
The EUR/USD created an inverted hammer on Friday, as the weaker-than-expected September Eurozone PMI readings pushed the US-German yield differentials to new highs. The spread between the two-year US treasury yield and German two-year bund yield rose to 336 basis points, the highest since 1988. Further, the 10-year yield spread rose to a new 29-year high of 261 basis points. The yield differentials could widen further in the EUR-negative manner if the German Zew surveys, scheduled for release at 08:00 GMT, disappoint expectations. As of writing this article, the EURUSD pair is trading at 1.1741 down by 0.07% on the day. Continued Fed hikes should help EUR/USD revisit the 1.15 area again in near future.
Intensifying Trade Dispute between China & US Dulls Investors Risk Appetite
With positive economic climate surrounding US markets, US FED is set to stay on course for scheduled in rate hikes in near future and this will greatly support US Greenback in positive manner in global markets. With the Fed still keen to continue the process of moving rates back towards ‘neutral’, it remains too early in our view for the FX market to price the Fed going on hold. Meanwhile, The common currency may also come under pressure if the European and US equities respond negatively to a decision by China to scrap trade talks with the US. In response to US tariff on Chinese goods worth $200b coming into effect today, Chinese govt has retaliated by adding 60 billion of U.S. products to its import tariff list and cancelling mid-level trade talks with the United States, as well as a proposed visit to Washington by vice premier Liu He originally scheduled for this week as per reports from the Wall Street Journal with no dates set for further talks.
The intensifying dispute between the world’s two biggest economies has spooked financial markets worried about the fallout on global growth there by inspiring a risk averse investor sentiment as trading session began for the week. When looking from technical perspective in daily chart, the indicators eased from near overbought levels, holding well into positive territory, rather than reflecting the latest slide supporting a downward extension ahead. Holding above August high, the 1.1720/30 region is the immediate support, with chances of a short-term decline on a break below it, increasing. In the 4 hours chart, however, the bullish case is strong, as the pair settled above all of its moving averages, with the 20 SMA heading north around 1.1720, and technical indicators resuming their advances well above their mid-lines and after correcting overbought conditions. Expected support and resistance for the pair are at 1.1730, 1.1695, 1.1660 and 1.1780, 1.1815, 1.1850 respectively.
This article was originally posted on FX Empire
