EUR/USD Forecast: Bears remain in control ahead of key central bank meetings
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UPGRADE- EUR/USD has been moving within a descending triangle.
- Additional losses could be witnessed if 1.1270 support fails.
- Mid-tier data releases are unlikely to trigger a market reaction before the Fed and the ECB's policy announcements.
EUR/USD has failed to reclaim 1.1300 and closed in the negative territory on Monday. The technical outlook doesn't point to a recovery in the near term as the pair continues to trade within a descending triangle.
Although the benchmark 10-year US Treasury bond yield fell sharply on Monday, the greenback found demand as a safe haven and managed to outperform its rivals. According to the latest reports, the coronavirus Omicron variant is spreading at a much faster rate than the Delta variant. Investors are concerned that supply bottlenecks remain unresolved for longer than expected with China shutting down factories in Zhejiang province.
The US Dollar Index, which tracks the dollar's performance against a basket of six major currencies, is consolidating Monday's gains below 96.50 and US stock index futures are rising modestly early Tuesday.
Eurostat will release October Industrial Production data later in the session. In the second half of the day, November Producer Price Index (PPI) data from the US will be looked upon for fresh impetus.
Nonetheless, the market reaction to these mid-tier data releases is likely to remain short-lived with investors remaining on the sidelines while gearing up for this week's key central bank events.
EUR/USD Technical Analysis
EUR/USD is currently testing the 100-period SMA on the four-hour chart at 1.1280. Even if the pair manages to hold above that hurdle, the descending trend line seems to have formed strong resistance around 1.1300. The 20-period and the 50-period SMAs are also reinforcing that area. Unless buyers manage to flip that level into support, the pair is unlikely to stage a convincing rebound.
On the downside, 1.1270 aligns as key support. If we see a four-hour candle close below that level, additional losses could be witnessed toward the next static support at 1.1240.
In the meantime, the Relative Strength Index (RSI) indicator stays below 50, confirming the view that the buyers are having a difficult time taking control of EUR/USD's action.
- EUR/USD has been moving within a descending triangle.
- Additional losses could be witnessed if 1.1270 support fails.
- Mid-tier data releases are unlikely to trigger a market reaction before the Fed and the ECB's policy announcements.
EUR/USD has failed to reclaim 1.1300 and closed in the negative territory on Monday. The technical outlook doesn't point to a recovery in the near term as the pair continues to trade within a descending triangle.
Although the benchmark 10-year US Treasury bond yield fell sharply on Monday, the greenback found demand as a safe haven and managed to outperform its rivals. According to the latest reports, the coronavirus Omicron variant is spreading at a much faster rate than the Delta variant. Investors are concerned that supply bottlenecks remain unresolved for longer than expected with China shutting down factories in Zhejiang province.
The US Dollar Index, which tracks the dollar's performance against a basket of six major currencies, is consolidating Monday's gains below 96.50 and US stock index futures are rising modestly early Tuesday.
Eurostat will release October Industrial Production data later in the session. In the second half of the day, November Producer Price Index (PPI) data from the US will be looked upon for fresh impetus.
Nonetheless, the market reaction to these mid-tier data releases is likely to remain short-lived with investors remaining on the sidelines while gearing up for this week's key central bank events.
EUR/USD Technical Analysis
EUR/USD is currently testing the 100-period SMA on the four-hour chart at 1.1280. Even if the pair manages to hold above that hurdle, the descending trend line seems to have formed strong resistance around 1.1300. The 20-period and the 50-period SMAs are also reinforcing that area. Unless buyers manage to flip that level into support, the pair is unlikely to stage a convincing rebound.
On the downside, 1.1270 aligns as key support. If we see a four-hour candle close below that level, additional losses could be witnessed toward the next static support at 1.1240.
In the meantime, the Relative Strength Index (RSI) indicator stays below 50, confirming the view that the buyers are having a difficult time taking control of EUR/USD's action.
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