EUR/USD Forecast: Mounting uncertainty fuels the US Dollar
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UPGRADEEUR/USD Current Price: 1.0674
- Tepid European data weighed on an already dismal market mood.
- Uncertainty reigns ahead of central banks’ meetings in the upcoming week.
- EUR/USD pressures its recent highs and aims to break the multi-week low at 1.0634.
The EUR/USD pair peaked at 1.0732 early in the European session but eased from this level, trading below the 1.0700 threshold, as bulls find it hard to maintain the pressure. The mood is sour as the macroeconomic calendar continues to offer dismal figures. Following the poor services output indicators in the US released on Monday, Germany published April Factory Orders, which unexpectedly fell 0.4% MoM, and by 9.9% YoY, much worse than anticipated. Additionally, Eurozone Retail Sales were unchanged in April compared with the previous month, missing the 0.2% growth expected, while annual Retail Sales were down by 2.6%.
The news weighed on the Euro, while the US Dollar benefited from the cautious market mood. Uncertainty about upcoming central banks’ decisions is behind the ongoing sentiment, even more after the Reserve Bank of Australia (RBA) unexpectedly hiked rates on Tuesday for a second consecutive meeting. Australian policymakers judged the risk of high inflation outweighs the potential financial stress higher rates may cause. Still, according to the CME FedWatch Tool, chances the Federal Reserve (Fed) will remain on hold next week stand at around 75%.
Meanwhile, European indexes trade in the red reflecting the dismal mood, pushing US futures also lower. Finally, demand for safety is pushing government bond yields lower, which limits USD strength.
EUR/USD short-term technical outlook
The EUR/USD pair daily chart shows that it trades at the lower end of its latest range and that the bearish bias remains intact. The pair continues to develop below a bearish 20 Simple Moving Average (SMA) that extends its slide below a flat 100 SMA. At the same time, both moving averages are above a critical Fibonacci resistance level, the 61.8% retracement of the 2022 yearly decline at 1.0745. Finally, technical indicators remain within negative levels, with the Momentum lacking directional strength but the Relative Strength Index (RSI) gaining downward traction.
The bearish case is clearer in the near term, according to the 4-hour chart. The pair has extended its slide below a flat 20 SMA, while the longer moving averages extend their slides far above the shorter one. Meanwhile, technical indicators head firmly lower near oversold readings, in line with another leg south. The main support level is the multi-week low posted in late May at 1.0634, and a break below it would open the door for a test of the 1.0550 region.
Support levels: 1.0635 1.0590 1.0550
Resistance levels: 1.0710 1.0745 1.0790
EUR/USD Current Price: 1.0674
- Tepid European data weighed on an already dismal market mood.
- Uncertainty reigns ahead of central banks’ meetings in the upcoming week.
- EUR/USD pressures its recent highs and aims to break the multi-week low at 1.0634.
The EUR/USD pair peaked at 1.0732 early in the European session but eased from this level, trading below the 1.0700 threshold, as bulls find it hard to maintain the pressure. The mood is sour as the macroeconomic calendar continues to offer dismal figures. Following the poor services output indicators in the US released on Monday, Germany published April Factory Orders, which unexpectedly fell 0.4% MoM, and by 9.9% YoY, much worse than anticipated. Additionally, Eurozone Retail Sales were unchanged in April compared with the previous month, missing the 0.2% growth expected, while annual Retail Sales were down by 2.6%.
The news weighed on the Euro, while the US Dollar benefited from the cautious market mood. Uncertainty about upcoming central banks’ decisions is behind the ongoing sentiment, even more after the Reserve Bank of Australia (RBA) unexpectedly hiked rates on Tuesday for a second consecutive meeting. Australian policymakers judged the risk of high inflation outweighs the potential financial stress higher rates may cause. Still, according to the CME FedWatch Tool, chances the Federal Reserve (Fed) will remain on hold next week stand at around 75%.
Meanwhile, European indexes trade in the red reflecting the dismal mood, pushing US futures also lower. Finally, demand for safety is pushing government bond yields lower, which limits USD strength.
EUR/USD short-term technical outlook
The EUR/USD pair daily chart shows that it trades at the lower end of its latest range and that the bearish bias remains intact. The pair continues to develop below a bearish 20 Simple Moving Average (SMA) that extends its slide below a flat 100 SMA. At the same time, both moving averages are above a critical Fibonacci resistance level, the 61.8% retracement of the 2022 yearly decline at 1.0745. Finally, technical indicators remain within negative levels, with the Momentum lacking directional strength but the Relative Strength Index (RSI) gaining downward traction.
The bearish case is clearer in the near term, according to the 4-hour chart. The pair has extended its slide below a flat 20 SMA, while the longer moving averages extend their slides far above the shorter one. Meanwhile, technical indicators head firmly lower near oversold readings, in line with another leg south. The main support level is the multi-week low posted in late May at 1.0634, and a break below it would open the door for a test of the 1.0550 region.
Support levels: 1.0635 1.0590 1.0550
Resistance levels: 1.0710 1.0745 1.0790
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