11.03.201905:31 Forex Analysis & Reviews: Fundamental Analysis of EUR/USD for March 11, 2019

USD has been the dominant currency in the pair while the euro zone struggled to gain momentum which lead the price below 2018's low in the process. The breakout was quite significant recently but certain correction and retrace may be observed along the way.

USD lost its momentum built on Thursday within 24 hours of the daily close because of the significant decrease in Non-Farm Employment report published on Friday. Though the Average Hourly Earnings report showed an increase to 0.4% from the previous value of 0.1% and the Unemployment Rate had a positive result of decreasing to 3.8% from the previous value of 4.0%, the significant decrease to Non-Farm Employment change plunging to 20k from the previous figure of 311k was a big blow to the USD gains which were building in the process for further downward momentum. Today Fed Chair Jerome Powell stated that the US is not looking forward to changing its interest rate soon as the global economic slowdown affected the economy. According to Powell, the rates are currently quite appropriate to sustain the economic momentum. As for the news from Europe, China and other global issues caused an economic slowdown which may affect the US economy as well, so without having proper confirmation of the situation, no step towards changing the interest rate or monetary policy is expected.

Today the US Retail Sales report is going to be published which is expected to increase to 0.0% from the previous value of -1.2% and the Core Retail Sales is expected to increase to 0.4% from the previous negative value of -1.8%. It can enhance activity of USD bulls in the market as an increase in sales would indicate a better economic development in the process. The upcoming CPI and PPI reports, which are also expected to be quite positive, may lead to further gains on the USD side.

On the other hand, the euro zone, facing the worse economic slowdown, led to significant momentum loss in the process. The economic slowdown in the euro zone started with the deficit on the budget on which ECB is currently looking deeply to avoid such incident in future. According to ECB member Vasle, economic cycle in the euro zone has turned down and when the economy can regain momentum is still uncertain. Moreover, he added Trade Limitations are the biggest risk for the euro zone. Ahead of Brexit which is less than just 3 weeks away, the weakness is expected to lead to further losses in the euro gains in the process while USD being optimistic may lead to stronger downward gains, but certain volatility may be observed along the way as the US may also suffer certain consequences.

Now let us look at the technical view. The price closed above the 1.1200 area on Friday after an impulsive breakout earlier. The price is currently expected to push higher towards 1.1300 area before pushing lower with the trend breakout. The retrace is expected to be quite volatile and corrective as of the upcoming high impact economic reports are yet to be published in the coming days of the week. As the price remains below 1.1300 area with a daily close, the bearish bias is expected to continue further.