EUR/USD has been most volatile and unpredictable pair recently after breaking above the 1.1300 area with a daily close. The market is indecisive ahead of BREXIT and further trade talks between the US and China. So, there are reason behind the market indecision.
The European Central Bank recently stated that it would allot 2.0 billion Euros at its three-month operation and 6.0 billion Euros at its weekly refinancing tender. Additionally, Finance Minister of Germany Mr. Olaf Scholz stated that Germany has a greater possibility to escape the recession whereas the overall European economy has such chances as well. With the risk of trade conflicts and BREXIT being the headwind for the eurozone, recent data provided fresh evidence for a slowdown in the eurozone's economy, but it is likely to be short-lived. The positive hawkish statement drew market sentiment towards EUR but it is not enough for EUR to gain strong momentum in a certain direction.
On the other hand, USD has been affected by downbeat economic reports recently which caused USD to weaken across the board. Meanwhile, EUR is taking advantage of USD broad-based weakness. Recently the Federal Reserve stated in a report of economic scorecard that Trump's Administration undershot a little to ensure its 3% annual GDP target for 2018. As per verdict, the elements which affected economic growth are the impact of tax cuts and other policies warning, wider Federal Reserve's deficit, and trade protectionism. On the other hand, during this period the only thing which was in uptrend was employment growth. Ahead of FED Chairman Powell's Testimony this week, USD is expected to be trade with higher volatility and may lose certain momentum until any the US provides upbeat economic data.
Meanwhile, the pair is expected to be quite volatile throughout the week. On the one hand, EUR found support from the long-term growth forecast. On the other hand, USD failed short of reaching the target. As a result, EURO could win favor with investors in the coming days. Until the US comes up with positive events and economic reports to take place throughout the week, EUR is expected to lead the way.
Now let us look at the technical view. The price is currently residing above the Pennant trend line resistance with a strong bullish momentum which is expected to lead the price higher towards 1.1450-1.1500 area in the coming days. As the price remains above 1.1300 area with a daily close, the bullish bias is expected to continue further.
