EUR/USD Forecast: Recovery could continue in the short-term
|EUR/USD Current Price: 1.1054
- Trade tensions between the US and China continue to dent investors’ mood.
- US Retail Sales bounced in October, Industrial Production, however, missed expectations.
- EUR/USD could test the 1.1100 level before long-term sellers return.
The EUR/USD pair has recovered some ground Friday, ending the week with modest gains at around 1.1050. The American dollar extended its slide as speculative interest couldn’t find a reason to keep on buying it. Trade woes between the US and China and mixed US data exacerbated profit-taking ahead of the close. Wall Street settled at record highs, while government bond yields bounced just modestly, indicating decreasing demand for safety.
The EU October inflation came in as expected, up by 0.7% YoY, and with the core CPI up by 1.1%. In the US, on the other hand, Retail Sales were slightly better than expected, up by 0.3% in October, although Industrial Production fell by 0.8% in the same month, while Capacity Utilization shrank to 76.7%, both below forecasts. The macroeconomic calendar has little to offer this Monday, which means sentiment will continue leading the way.
EUR/USD short-term technical outlook
The daily chart for the EUR/USD pair shows that it has managed to extend its recovery from the 61.8% retracement of the October rally, to settle just below the 38.2% retracement of the same rally at 1.1065. The risk remains skewed to the downside, as the 20 and the 100 DMA continue heading firmly lower above the current level, while technical indicators have recovered within negative levels, although without bullish strength. In the 4-hour chart, the pair has room to extend its advance, although the bullish potential is limited, with the 100 DMA maintaining its downward slope well above the current level and technical indicators well above their midlines, the Momentum decelerating and the RSI already turning lower.
Support levels: 1.1015 1.0985 1.0950
Resistance levels: 1.1065 1.1110 1.1140
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