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EUR/USD Forecast: With The Risk Skewed To The Upside But Needs To Clear 1.1180

Valeria Bednarik - Chief Analyst at FXStreet

EUR/USD Current Price: 1.1149

  • Mixed US data failed to trigger relevant moves in USD crosses.
  • Speculative interest eagerly waiting for details on the US-China trade deal.
  • EUR/USD with the risk skewed to the upside but needs to clear 1.1180.

The EUR/USD pair has extended its advance to 1.1174, a fresh weekly high, but retreated from the level to settle above the 1.1150 price zone. The market mood turned sour at the beginning of the day, as fears of a hard-Brexit returned, alongside uncertainty around the US-China trade deal, as the market is waiting for details on what they have agreed to.  

Data didn’t move the bar, as minor figures were out from both economies. The EU released October Trade Balance, with the seasonally adjusted surplus up to €24.5B.

The US, on the other hand, published November Housing Starts and Building Permits, which surprised to the upside by rising 3.2% and 1.4% respectively. Industrial Production in the same month rose 1.1%, beating expectations, but Capacity Utilization contracted to 77.3%. This Wednesday, attention will be on the German IFO survey and EU November inflation data. The US macroeconomic calendar has nothing relevant to offer.

EUR/USD short-term technical outlook

The EUR/USD pair has advanced above the 23.6% retracement of its December rally at 1.1145, but there was no follow-through. The risk remains skewed to the upside, according to the 4-hour chart, although the bullish potential is fading,  as, despite holding above a 20 SMA, the moving average has turned horizontal.

Technical indicators in the mentioned chart remain directionless, the Momentum below its mid-line and the RSI at around 58, keeping the downside potential limited. The pair could resume its advance on a break above 1.1180, October high, and the immediate resistance.

Image by angelo luca iannaccone from Pixabay

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