EUR/USD Forecast: Sellers aligned ahead of 1.0800
|EUR/USD Current Price: 1.0752
- The US Dollar finds support in firmer US government bond yields, holds within familiar levels.
- The European Central Bank Economic Bulletin repeated the well-known message of higher for longer.
- EUR/USD met sellers ahead of 1.0800, aims to extend its slide below 1.0700.
The EUR/USD pair peaked at 1.0788 early on Thursday, turning south mid-European session and currently trading in the 1.0750 price zone. The US Dollar gathered modest momentum across the FX board ahead of Wall Street’s opening, helped by the better tone of equities, reflecting an improved mood. However, major pairs remain confined to familiar levels amid the absence of a relevant catalyst.
Market participants have heard policymakers from around the world cooling down hopes for soon-to-come rate cuts in the previous weeks and are looking to anticipate the following monetary policies’ movements.
The European Central Bank (ECB) released the Economic Bulletin, usually published two weeks after the central bank’s meeting. The document showed the Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner, adding the risks to economic growth remain tilted to the downside. Furthermore, the document acknowledged the Euro Area economy is likely to have stagnated at the end of 2023. Finally, it reiterated that the Governing Council would maintain rates at sufficiently restrictive levels for as long as necessary. The document did not impact the Euro, as it repeated a well-known message.
The upcoming American session will bring the United States (US) Initial Jobless Claims for the week ended February 2 and December Wholesale Inventories. Additionally, multiple Federal Reserve (Fed) officials will be on the wires, and speculative interest will pay close attention to their comments in search of fresh clues. Meanwhile, the US Dollar finds near-term support in higher government bond yields ahead of auctions, with the 10-year Treasury note currently offering 4.13%.
EUR/USD short-term technical outlook
From a technical perspective, the EUR/USD pair seems poised to extend its decline. The daily chart shows it met sellers around a flat 100 Simple Moving Average (SMA) while the 20 SMA maintains its firmly bearish slope above it. Also, the pair flirted with the weekly high and was unable to extend its rally, suggesting unconvinced buyers. Finally, technical indicators turned lower within negative levels, in line with resurgent selling interest.
For the near term, the 4-hour chart supports the bearish case. Technical indicators rotated sharply lower, retaining their bearish slopes. Particularly, the Relative Strength Index (RSI) indicator anticipates further slides, as it currently stands at 41 without signs of bearish exhaustion. At the same time, EUR/USD is currently extending its slide below the 20 SMA, which formerly offered support. A steeper decline could be expected once the pair slides below 1.0720.
Support levels: 1.0720 1.0695 1.0650
Resistance levels: 1.0790 1.0840 1.0880
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