EUR/USD Forecast: Near-term buyers struggling to retain 1.0900
|EUR/USD Current Price: 1.0900
- Concerns about the Chinese economy limited US Dollar’s decline at the beginning of the week.
- The German Producer Price Index contracted by more than anticipated in July.
- EUR/USD current advance seems corrective, bullish breakout point still far away.
The EUR/USD pair recovered the 1.0900 threshold during European trading hours, as demand for the US Dollar receded at the beginning of the week. A scarce macroeconomic calendar, however, keeps major pairs within limited intraday ranges, with EUR/USD currently hovering around the level.
Stock markets trade mixed heading into Wall Street’s opening after a soft Asian start, given persistent concerns about China. Also, the People’s Bank of China (PBoC) cut the one-year Loan Primer Rate by 10 basis points (bps) to 3.45% on Monday, as expected, putting slight pressure on the USD.
Meanwhile, government bond yields advance as investors gear up for the Jackson Hole Symposium, featuring speeches from the heads of major central banks. The event will occur as usual in the United States (US), with Federal Reserve (Fed) Chair Jerome Powell scheduled on Friday. Market participants will be looking for additional clues on the future of monetary policy.
The Euro found support in German data, as the July Producer Price Index (PPI) declined 1.1% MoM and 6% YoY, further signaling easing inflationary pressures. Still, the Bundesbank released its monthly report, which noted persistent wage pressures could negatively impact efforts to curb inflation.
EUR/USD short-term technical outlook
From a technical point of view, the EUR/USD pair seems to be correcting higher, but with the bullish potential still well-limited. The daily chart shows that the pair remains below a flat 100 Simple Moving Average (SMA), which provides resistance at 1.0930. At the same time, the 20 SMA maintains its firmly bearish slope above the longer one, suggesting bears remain strong. Finally, technical indicators have recovered some ground, but given that they stand within negative levels, the odds for a firmer recovery are quite a few.
For the near term, the 4-hour chart suggests the corrective advance can continue. The pair trades above a now flat 20 SMA, although still well below the long ones. Technical indicators, in the meantime, head north above their midlines, reflecting near-term buying interest. Bulls will have better chances if the current rally extends beyond the 1.0960 price zone, which is quite an unlikely scenario at the time being.
Support levels: 1.0860 1.0825 1.0790
Resistance levels: 1.0930 1.0960 1.1005
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