The euro managed to gain and sustain certain momentum over the US dollar in the corrective and volatile market while residing below 1.1300 area with a daily close. The US and China cannot come to terms yet. Thus, the trade war might continue. FOMC remains neutral with the monetary policy.
Eurozone is still struggling with the economic slowdown. Although some mixed economic reports from the eurozone helped the euro to strengthen against the greenback. However, the US dollar managed to gain certain momentum. According to European Commission economic forecast, EURO is likely to continue a downtrend during 2019 with the hope of a rebound in 2020. The GDP growth is anticipated to be at 1.2% comparing to 1.9% in 2018. The unemployment rate should stay at 7.7%. This figure is better than previous one but not the best. The current budget deficit of the eurozone may rise to 0.9% of GDP. Although the debt of the eurozone might decrease, but it's not enough to boost the euro.
Moreover, trade wars are the major reason for the weakness in emerging markets, especially in China. The Brexit deal which is constantly prolonged may end with a no-deal at all. Today, the German Trade Balance report is going to be published. The reading is expected to grow to 19.4B from the previous figure of 18.7B. Italian Retail Sales is likely to rise to 0.3% from the previous value of 0.1%.
The US Federal Reserve is quite concerned about the consequences for the economy which are derived from certain market sentiment. The US economy is near to the point when inflation moves higher and a scheduled tariff increase for Chinese imports might also lead to the price hike. U.S. President Donald Trump offered to raise the tariff to 25% on $200 billion worth of Chinese goods. This action has had some impact already. Beijing said it would strike back. Therefore, tension is getting stronger as both sides pursue last-ditch talks trying to reach an agreement.
Today US CPI report is going to be published. The reading is expected to be unchanged at 0.4%. The Federal Budget Balance is also expected to drop to -165.2B from the previous figure of -146.9B. Additionally, FOMC members Brainard and Williams are going to give a speech today. If their speech is well received, it may lead to certain gains for USD in the coming days.
As for the current scenario, USD might be influenced by the economic reports today. It may lead to certain volatility in the pair. The euro, on the contrary, may gain ground from the optimistic economic reports. However, certain volatility is also possible.
Now let us look at the technical view. The price is currently heading towards 1.1250-1.1300 resistance area. If any bearish pressure or bullish rejection is observed, then continuation of the bearish momentum in the pair is expected with target towards 1.1050 support area in the coming days. As the price remains below 1.1300 area, the bearish bias is expected to continue.
