EUR/USD Forecast: limited momentum, but risk still towards the upside
|The American dollar remains soft across the board, with the EUR/USD pair trading not far from the 1-month high posted last week a 1.0782. A light macroeconomic calendar in Asia alongside with a bank holiday in Japan has kept major pairs limited at the beginning of the day, although London opening brought some risk aversion, with stocks trading marginally lower, following weekend news that the G-20 dropped its pledge against trade protectionism.
Germany released its February Producer Price Index for February, which rose by 0.2% in the month as expected, down from a 0.7% in January. Yearly basis, the index of producer prices for industrial products rose by 3.1%. Later on the day, the US will release the Chicago Fed national activity index, whilst Fed's Evans will speak mid American afternoon, none expected to trigger big movements.
As for the technical outlook, the 4 hours chart shows that while the 20 SMA has extended below the current level, providing a dynamic support in the 1.0730 region, technical indicators keep retreating within positive territory, with the Momentum nearing its 100 level and the RSI indicator still near overbought readings, all of which maintains the risk towards the upside, but indicates limited buying interest at the time being. The price needs to break above the mentioned high to be able to extend its recovery up to 1.0820, the 50% retracement of the post-US election slump.
The 1.0730 region, on the other hand, is the immediate support and the level to break to see the pair correcting further lower, although buying interest will likely surge on approaches to the 1.0700 level.
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