EUR/USD Forecast: Bearish momentum to accelerate once below 1.1065
|EUR/USD Current Price: 1.1093
- EU inflation confirmed at 1.3% YoY in December, well below the ECB’s target.
- US data missed the market’s expectations, but demand for US equities backed the greenback.
- EUR/USD closed the week below 1.1100, poised to extend its decline.
The American dollar has extended its advance on Friday to finish the week with gains against most major rivals. The EUR/USD pair closed a handful of pips above its January low of 1.0984, and market players seem determined to send it lower. The greenback’s positive momentum was triggered by stronger-than-expected Retail Sales published on Thursday, which highlighted the better shape of the American economy when compared to its major counterparts. Demand for US equities has also backed the dollar, with Wall Street extending its rally to record highs daily basis after the signature of phase one of the trade deal between the country and China.
Data released at the end of the week came in below with the market’s expectations, incapable of changing the dominant sentiment. EU December inflation was confirmed at 1.3% YoY, while November Construction Output was up by 1.4%, below the expected 1.9%. In the US, Industrial Production decreased by 0.3% in December, while the preliminary estimate of the January Michigan Consumer Sentiment Index printed at 99.1missing the 99.3 forecast. Monday’s calendar will be lighter, as it will only include the German December PPI. The US will celebrate the Martin Luther King holiday, with most markets closed.
EUR/USD short-term technical outlook
The EUR/USD pair has broken below a daily ascendant trend line coming from November’s low at 1.0980, and intraday charts show that it completed a pullback to the line before resuming it’s decline a sign of more slides ahead. In the daily chart, the pair plunged after failing to hold above the 20 and 200 SMA, both converging around 1.1140 while technical indicators head south almost vertically within negative levels. The 100 SMA provides dynamic support at 1.1065. In the 4-hour chart, the pair has fallen below all of its moving averages, while technical indicators maintain their bearish slopes near oversold levels, with uneven strength, anyway skewing the risk to the downside.
Support levels: 1.1065 1.1020 1.0980
Resistance levels: 1.1140 1.1180 1.1220
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