EUR/USD Forecast: Bulls fight back but have little chance of winning the battle
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UNLOCK OFFEREUR/USD Current Price: 1.0786
- Risk aversion continues to boost demand for the US Dollar.
- Speculative interest awaits clues from the FOMC Meeting Minutes.
- EUR/USD is under selling pressure and faces higher chances of a bearish breakout.
The EUR/USD pair dived in the mid-European morning and fell to 1.0747, recovering afterwards and currently nearing the 1.0800 mark. The US Dollar strengthened against all its major rivals amid mounting risk-off, with the focus still on the United States (US) debt-ceiling talks and the upcoming Federal Open Market Committee (FOMC) Minutes. US President Joe Biden and House Republicans will resume talks this Wednesday, with less than a week left to clinch a deal.
Meanwhile, the dismal mood was exacerbated by United Kingdom (UK) inflation figures. The Consumer Price Index (CPI) rose by 8.7% YoY in April, higher than the 8.2% anticipated, although below the previous 10.1%. Core annual inflation jumped to 6.8% in the year to April, much higher than the 6.2% increase registered in March. Financial markets rushed to price in at least two more rate hikes in the UK.
In Europe, preliminary results from the semestral stress test to banks were encouraging. The European Central Bank (ECB) periodically reviews the ability of major local banks to absorb shocks and meet capital requirements under adverse macroeconomic conditions. Large EU banks show robust financial health, somehow opening the door for a more aggressive monetary policy.
The Euro got hit by the German IFO survey on Business Climate, which declined to 91.7 in May, missing market expectations. The assessment of the current situation also declined, from 93.1 in March to 88.6, while Expectations improved to 94.8 from 91.7. The US will not publish relevant macroeconomic data, although FOMC Minutes could shake the board, mainly if the document paints a hawkish picture. Also, US Treasury Secretary Janet Yellen and ECB President Christine Lagarde will hit the wires in the American afternoon.
EUR/USD short-term technical outlook
The EUR/USD pair pressures the upper end of its daily range ahead of Wall Street’s opening. Technically, however, the chances of a firmer recovery remain limited. The daily chart shows that the pair develops below the 20 and 100 SMAs (Simple Moving Averages), with the shorter one accelerating its decline. Technical indicators have pared their slides but show no directional strength well into negative territory, maintaining the risk skewed to the downside.
In the 4-hour chart, the pair met sellers around its 20 SMA, although it holds near the indicator. Meanwhile, the longer moving averages gain bearish traction far above the shorter one. Finally, technical indicators rotate higher, although without bullish strength and still far below their midlines. Bears could gain complete control of the pair on a break below 1.0745, the 61.8% Fibonacci retracement of the 2022 yearly slump.
Support levels: 1.0745 1.0700 1.0660
Resistance levels: 1.0795 1.0850 1.0895
EUR/USD Current Price: 1.0786
- Risk aversion continues to boost demand for the US Dollar.
- Speculative interest awaits clues from the FOMC Meeting Minutes.
- EUR/USD is under selling pressure and faces higher chances of a bearish breakout.
The EUR/USD pair dived in the mid-European morning and fell to 1.0747, recovering afterwards and currently nearing the 1.0800 mark. The US Dollar strengthened against all its major rivals amid mounting risk-off, with the focus still on the United States (US) debt-ceiling talks and the upcoming Federal Open Market Committee (FOMC) Minutes. US President Joe Biden and House Republicans will resume talks this Wednesday, with less than a week left to clinch a deal.
Meanwhile, the dismal mood was exacerbated by United Kingdom (UK) inflation figures. The Consumer Price Index (CPI) rose by 8.7% YoY in April, higher than the 8.2% anticipated, although below the previous 10.1%. Core annual inflation jumped to 6.8% in the year to April, much higher than the 6.2% increase registered in March. Financial markets rushed to price in at least two more rate hikes in the UK.
In Europe, preliminary results from the semestral stress test to banks were encouraging. The European Central Bank (ECB) periodically reviews the ability of major local banks to absorb shocks and meet capital requirements under adverse macroeconomic conditions. Large EU banks show robust financial health, somehow opening the door for a more aggressive monetary policy.
The Euro got hit by the German IFO survey on Business Climate, which declined to 91.7 in May, missing market expectations. The assessment of the current situation also declined, from 93.1 in March to 88.6, while Expectations improved to 94.8 from 91.7. The US will not publish relevant macroeconomic data, although FOMC Minutes could shake the board, mainly if the document paints a hawkish picture. Also, US Treasury Secretary Janet Yellen and ECB President Christine Lagarde will hit the wires in the American afternoon.
EUR/USD short-term technical outlook
The EUR/USD pair pressures the upper end of its daily range ahead of Wall Street’s opening. Technically, however, the chances of a firmer recovery remain limited. The daily chart shows that the pair develops below the 20 and 100 SMAs (Simple Moving Averages), with the shorter one accelerating its decline. Technical indicators have pared their slides but show no directional strength well into negative territory, maintaining the risk skewed to the downside.
In the 4-hour chart, the pair met sellers around its 20 SMA, although it holds near the indicator. Meanwhile, the longer moving averages gain bearish traction far above the shorter one. Finally, technical indicators rotate higher, although without bullish strength and still far below their midlines. Bears could gain complete control of the pair on a break below 1.0745, the 61.8% Fibonacci retracement of the 2022 yearly slump.
Support levels: 1.0745 1.0700 1.0660
Resistance levels: 1.0795 1.0850 1.0895
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