EUR/USD Forecast: US Dollar finds demand on a sour mood
|EUR/USD Current Price: 1.0944
- Federal Reserve officials´ hawkish words revived market concerns.
- The Eurozone Harmonized Index of Consumer Prices was confirmed at 6.9% YoY in March.
- EUR/USD turned bearish in the near term but so far holds above 1.0900.
The US Dollar is up on Wednesday as renewed concerns about a hawkish shift from the United States Federal Reserve (Fed) weighed on the market sentiment. The EUR/USD pair retreated from an early peak of 1.0983 and currently trades in the 1.0940 price zone.
On Tuesday, a couple of Fed officials favored additional rate hikes. On the one hand, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, said he believes it would take some time for inflation to return to target and that there’s still work to be done with monetary policy. On the other, St. Louis Federal Reserve President James Bullard noted that interest rates would need to continue to rise in the absence of clear progress on inflation. The mood was also dented by dismal macroeconomic figures that hinted at a global economic setback.
Stocks trade in the red in Europe, dragging Wall Street’s futures down, while government bond yields tick higher, reflecting investors’ concerns.
Data-wise, the United Kingdom published its March figures, which resulted higher than anticipated. The Consumer Price Index (CPI) rose at an annualized pace of 10.1% against the 9.8% expected. While the figure does not directly affect EUR/USD, it impacts market sentiment. The Eurozone published the February Current Account, which posted a seasonally adjusted surplus of €24.32 billion, and confirmed the March Harmonized Index of Consumer Prices (HICP) at 6.9% YoY. The United States calendar has nothing relevant to offer. The country published MBA Mortgage Applications for the week ended April 14, down 8.8%, while later in the day, it will release the Fed’s Beige Book.
EUR/USD short-term technical outlook
The daily chart for EUR/USD shows it has lost momentum, although a bearish continuation remains unclear. The 20 Simple Moving Average (SMA) has lost its bullish strength but stands below the current level, at around 1.0900. The longer moving averages keep advancing below it, but technical indicators extended their slides within positive levels, with the Momentum about to cross its midline into negative territory.
The case for a bearish extension is clearer in the near term. The 4-hour chart shows that a bearish 20 SMA continues to limit advances, while so far, EUR/USD is meeting buyers around a mildly bullish 100 SMA. Technical indicators, however, failed to cross their midlines into positive ground and resumed their declines, maintaining their bearish slopes early in the American session.
Support levels: 1.0895 1.0850 1.0810
Resistance levels: 1.0970 1.1010 1.1060
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