EUR/USD Forecast: Bearish while under 1.0950
|- The Euro rebounded modestly versus the US Dollar and fell further against the Pound.
- The US Dollar corrected lower on a quiet session, after weaker-than-expected US data.
- The EUR/USD remains with a bearish bias, supported by the 1.0850 area.
The EUR/USD pair rose modestly on Monday, after last week's losses on the back of a weaker US Dollar across the board, following worse-than-expected US economic data. Despite rising versus the Dollar, the Euro dropped further against the Pound, approaching multi-month lows.
Economic data released on Monday showed that Industrial Production in the Eurozone dropped by 4.1% in March, more than the 2.5% slide expected. In Germany, the Wholesale Price Index fell 0.4% in April, less than the -0.9% expected; and the annual index dropped from 2% in March to -0.5% in April. Eurozone employment and GDP data for the first quarter are due on Tuesday, and also the May German ZEW survey. The Euro area is expected to avoid contraction with a marginal expansion.
The US Dollar lost ground on Monday, amid mixed markets and following the US New York Empire Manufacturing index that tumbled from 10.8 in April to -31.8 in May. Key data is due on Tuesday with April Retail Sales. Regarding the debt ceiling drama, President Biden will meet with House Speaker Kevin McCarthy. The deal on the Greenback took place amid an improvement in market sentiment, and despite higher US bond yields.
EUR/USD short-term technical outlook
The EUR/USD has been moving with a bearish bias since May 5. Monday's modest recovery keeps that bias intact. The immediate resistance is seen around 1.0900, a horizontal level and also the 20-period Simple Moving Average (SMA) in 4-hour charts. If the Euro recovers above it, it would alleviate the bearish pressure; however, it needs to surpass a downtrend line currently at 1.0950 to change the short bias from bearish to neutral/bullish.
On the downside, a slide under 1.0860 would expose the 1.0840 support; a slide below would initially target 1.0820 and then 1.0780.
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