Fundamental Analysis of EUR/USD for January 28, 2019

EUR/USD has been extremely volatile recently, trading inside the corrective range between 1.1200 to 1.1500 area. Ahead of the FOMC Statement, a policy update, and NFP report this week, USD is expected to have increased volatility against EURO throughout the week.

The Federal Reserve is not expected to raise its official funds rate which is currently sitting at 2.50%. Though the US Fed is expected to lift interest rates twice this year, the firts rate hike is likely to be delayed to 2nd quarter of the year. Investors are going to keep close eye to Jerome Powell's speech at the press conference on Wednesday for any hint that the central bank can provide while being closer to ending its balance sheet. The US Labor Department is going to publish NFP reports on Friday this week. Though the expectations are downbeat, any positive change can lead to certain gains on the USD side. Tomorrow US CB Consumer Confidence report is due which is expected to decrease to 125.0 from the previous figure of 128.1.

On the EUR side, ahead of ECB President Draghi's speech today, EUR managed to gain momentum over USD. The eurozone's economic growth signals a slowdown more than expected. After the ECB policy meeting, Presdent Draghi warned of further weakness in the eurozone in the short term. According to ECB's quarterly survey, a key element of Thursday's policy update is downgraded GDP growth for 2019 to 1.5% which was expected to be at 1.8% in the previous forecast. The Inflation is also dipping to 1.5% which was projected at 1.7% earlier. The ECB has been missing the inflation target since 2013 but consistency in this case is getting worse for the economy in the long run. If today's Draghi's speech drops any positive hint for market participants, this will be certainly bullish for EUR. Otherwise, EUR is expected to lose further momentum versus USD.

Meanwhile, ongoing EUR gains are likely to be short-lived and USD may regain momentum after certain corrections with better sustainability in the coming days.

Now let us look at the technical view. The price recently engulfed the impulsive bearish pressure with a daily close. Currently the price is moving higher. The price is heading for 1.1450-1.1500 resistance area before pushing lower again with a target towards 1.1200-1.1300 support area in the coming days. As the price remains below 1.1500 area, the bearish bias is expected to continue.

SUPPORT: 1.1200-50, 1.1300

RESISTANCE: 1.1450, 1.1500

BIAS: BEARISH

MOMENTUM: VOLATILE

analytics5c4e9c618678d.png

The material has been provided by InstaForex Company - www.instaforex.com