EUR/USD Forecast: Attention temporarily shifts from inflation to economic growth
|EUR/USD Current Price: 1.0685
- Geopolitical tensions undermined the market mood at the beginning of the week.
- Market players await the preliminary estimates of February S&P Global PMIs.
- EUR/USD consolidates around 1.0680, with the risk skewed to the downside.
The EUR/USD pair hovers around 1.0680 heading into Tuesday’s opening, little changed in a sluggish start to the week. The US Dollar benefited just modestly from a risk-averse environment triggered by mounting geopolitical tensions. On the one hand, North Korea fired an intercontinental ballistic missile on Saturday that landed in the Sea of Japan. On the other, US President Joe Biden unexpectedly visited Kyiv to announce additional weapons supplies.
Data-wise, the Euro Zone published December Construction Output, which contracted by 1.3% YoY and 2.% MoM, worse than anticipated. Additionally, the preliminary estimate of February Consumer Confidence resulted at -19, as expected, barely improving from the previous -20.9 in January.
S&P Global will publish the preliminary estimates of its February PMIs on Tuesday, and according to the market forecasts, business output is expected to have improved a bit in the Euro Zone. Manufacturing activity is expected to remain in contraction territory, while services output is seen expanding modestly. Germany will release the February ZEW Survey on Economic Sentiment, while the United States S&P Global PMIs scheduled for later in the day, are foreseen to hold below the 50 level.
EUR/USD short-term technical outlook
From a technical point of view, the daily chart for the EUR/USD pair reflects bears’ dominance. The pair continues to trade below a bearish 20 Simple Moving Average (SMA) while also below a critical Fibonacci level, the 61.8% retracement of the 2022 yearly slump at 1.0745. Technical indicators, in the meantime, consolidate within negative levels without apparent directional strength. Finally, the 100 SMA maintains its upward slope well below the current price, drawing a line in the sand at 1.0410.
The 4-hour chart shows that EUR/USD struggles to recover beyond a bearish 20 SMA, while the 100 SMA is crossing below the 200 SMA, both at around 1.0780, all of which skews the risk o the downside. The same chart shows technical indicators head nowhere at around their midlines, reflecting the absence of speculative interest.
Support levels: 1.0655 1.0620 1.0570
Resistance levels: 1.0745 1.0790 1.0830
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