EUR/USD has been quite impulsive amid the recent bearish momentum after breaking above 1.1500 earlier. This move caused a false bullish breakout. EUR has been weighed down by the recent economic reports which forced the currency to lose ground. On the other hand, this allowed USD to gain momentum.
According to the recent survey from Germany, nearly two thirds of the businesses want the ECB to raise interest rate to encourage economic developments despite the clouded growth outlook. Market expects the ECB to hike its rate not until 2020 that might derive market sentiment away from the currency. Ahead of ECB President Draghi's speech which is expected to determine the EUR's momentum in the coming days, today German WPI report was published with a decrease to -1.2% from the previous value of 0.2% which was expected to increase to 0.3% and Industrial Production also decreased to -1.7% from the previous value of 0.1% which was expected to increase to 0.3%. Moreover, the Brexit Vote on Tuesday may trigger higher volatility in the EUR/USD pair. The brexit deal suggested by Theresa May is widely expected to be rejected, thus increasing the scenario of a hard Brexit in March 2019.
On the other hand, USD has been hurt by the recent economic reports but managed to regain momentum over EUR despite the impulsive bullish momentum earlier. Today the economic calendar lacks economic reports or events in the US to effect the overall price momentum. Tomorrow US PPI report is going to be published which is expected to decrease to -0.1% from the previous value of 0.1%, Core PPI is expected to decrease to 0.2% from the previous value of 0.3%, Empire State Manufacturing Index is expected to increase to 11.6 from the previous figure of 10.9, and IBD/TIPP Economic Optimism is expected to increase to 53.1 from the previous figure of 52.6. On Thursday, Unemployment Claims report is going to be published which is expected to have a negative result of growth to 218k from the previous figure of 216k and FOMC Member Quarles is due to speak about further monetary policy. His speech is expected to be quite neutral in rhetoric. The Federal Reserve is widely expected to pause in the cycle of monetary tightening in 2019.
Meanwhile, EUR is currently struggling with the worse-than-expected economic reports while neutral USD is responsible for the bearish momentum in the pair. Amid the BREXIT vote and upcoming ECB President Draghi's speech, the pair is going to trade with higher volatility which might lead to certain spikes, but the bias is still on the USD side on the back of upbeat economic expectations.
Now let us look at the technical view. The price is currently residing inside the corrective range of 1.1450 to 1.1500 area from where a daily close below 1.1450 is expected to lead to further bearish momentum with a target towards 1.1200-50 support area in the coming days. As the price remains below 1.1500 area with a daily close, the bearish bias is expected to continue.
SUPPORT: 1.1150, 1.1200, 1.1250
RESISTANCE: 1.1500, 1.1650, 1.1700
BIAS: BEARISH
MOMENTUM: VOLATILE
