EUR/USD Forecast: Mounting concerns weigh on the EUR
|EUR/USD Current Price: 1.0962
- Market players ignored hawkish European Central Bank policymakers.
- The focus shifts to the US Consumer Price Index, scheduled for Wednesday.
- EUR/USD is bearish in the near term, could accelerate its slide once below 1.0940.
The US Dollar advances on Tuesday, with EUR/USD trading at around 1.0960 amid a souring market mood. The Greenback began appreciating in the previous American session as investors digested central banks' decisions from the last week. The USD further advanced after the release of the Federal Reserve's (Fed) Senior Loan Officer Opinion Survey, which showed lenders have stiffened their standards while credit demand weakened. Economic uncertainty, a reduced appetite for risk, deterioration in collateral values and broader concerns about banks' funding costs and liquidity positions were among the main reasons for the tighter standards.
The absence of a fresh catalyst maintained the EUR/USD pair under pressure throughout the first half of the day. Hawkish European Central Bank (ECB) speakers failed to impress market players. On the one hand, ECB's policymaker Peter Kazimir said that "based on current data, the ECB will have to keep raising interest rates for longer than anticipated," while policymaker Martins Kazaks warned "rate-hiking may not be finished in July," adding that bets on a pause are premature.
The United States (US) macroeconomic calendar has nothing of interest today but includes some minor figures. So far, the country reported that the NFIB Business Optimism Index declined to 89 in April from 90.1 in March. Later in the day, the US will publish the IBD/TIPP Economic Optimism Index for May, previously at 47.4. The focus is on Wednesday's data, as the US will release the April Consumer Price Index (CPI), foreseen up by 5% YoY.
EUR/USD short-term technical outlook
The daily chart for the EUR/USD pair indicates an increased bearish potential. The pair broke below its 20 Simple Moving Average (SMA), acting as dynamic resistance at around 1.1000. The longer moving averages remain far below the current level, although they are losing their bullish momentum. Finally, technical indicators offer bearish slopes within neutral levels, still unable to extend their slides within negative levels.
The bearish case is clearer in the 4-hour chart. The pair develops below its 20 and 100 SMAs, with the shorter gaining downward traction above the longer one. The 200 SMA turned flat, now acting as support in the 1.0940 area. At the same time, technical indicators head firmly south within negative levels without signs of bearish exhaustion. A break through the 1.0940 region could lead to a steeper decline towards 1.0830.
Support levels: 1.0940 1.0890 1.0830
Resistance levels: 1.1000 1.1050 1.1100
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