EUR/USD Forecast: Investors run for safety ahead of first-tier events
|EUR/USD Current Price: 1.0829
- The Q4 Euro Zone Gross Domestic Product came in better than anticipated.
- The US Dollar gathers additional momentum ahead of central banks’ decisions.
- EUR/USD turned bearish in the near term but holds above the critical 1.0800 threshold.
The EUR/USD pair plummeted to 1.0801 on Tuesday as demand for the US Dollar gained momentum throughout the first half of the day. Upbeat Chinese data failed to change the sour market mood as market participants maintain the focus on the upcoming central banks’ monetary policy decisions. The US Federal Reserve and the European Central Bank will announce their monetary policies within 48 hours. Asian indexes struggled for direction but finally gave up and turned negative, heavily weighing on their European counterparts.
The Euro remained on the back foot, despite a better-than-anticipated Euro Zone Gross Domestic Product (GDP). The preliminary estimate of the Q4 showed the economy grew at an annualized pace of 1.9%, better than the 1.8% anticipated by financial markets. On a negative note, German Retail Sales plunged by 5.3% MoM in December, much worse than expected. The American session will bring minor United States figures, with the main focus on CB Consumer Confidence, foreseen at 109.1 in January, up from 108.3 in December.
EUR/USD short-term technical outlook
The EUR/USD pair recovered from the mentioned low to trade at around 1.0830 ahead of Wall Street’s opening, as European stocks bounced off their early lows, maintaining the red. From a technical point of view, the daily chart shows that the pair is down for a fourth consecutive day, although recovering from around a bullish 20 Simple Moving Average (SMA), currently at around 1.0795. The longer moving averages remain far below the current level, with the 100 SMA aiming to cross above a flat 200 SMA. Technical indicators, in the meantime, keep heading south within positive levels, anticipating further declines without confirming them.
In the near term, and according to the 4-hour chart, the risk skews to the downside. The pair has fallen further below a now bearish 20 SMA and is struggling around a bullish 100 SMA. At the same time, technical indicators stand below their midlines, the Momentum is directionless while the RSI heads firmly south at around 38. A critical support level comes at 1.0745, the 61.8% retracement of its 2022 slump. Bears could take control of the pair if it breaks below it, although it seems unlikely ahead of the upcoming first-tier events.
Support levels: 1.0795 1.0745 1.0700
Resistance levels: 1.0855 1.0890 1.0930
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