EUR/USD Forecast: A dismal mood maintains the pair under selling pressure

Valeria Bednarik FXStreet

EUR/USD Current price: 1.0882

ECB President Christine Lagarde will participate in a panel discussion in Davos.
The United States will publish housing and employment-related data.
EUR/USD at risk of falling further, support at around 1.0845.

The EUR/USD pair trades little changed for a second consecutive day, changing hands at around 1.0880 ahead of the United States (US) opening. The trading range is limited, as EUR/USD peaked at 1.0906, while it met a bottom at 1.0876. The soft tone of Asian share markets limited the upside for the Euro, while demand for the US Dollar receded on the back of more stable government bond yields that put a halt to their latest rally.

Chinese headlines weigh on the market mood after the country released tepid macroeconomic data, spiced with trouble in the housing sector. At the same time, a resilient US economy weighed down the odds for a March rate cut, further undermining the sentiment.

Meanwhile, the Eurozone released the November Current Account, which posted a seasonally adjusted surplus of €24.6 billion, while Construction Output in the same month was down 1%. The American session will bring US Initial Jobless Claims, the Philadelphia Fed Manufacturing Survey, Building Permits and Housing Starts.

Also, European Central Bank (ECB) President Christine Lagarde will participate in a panel discussion titled "Uniting Europe's Markets" at the World Economic Forum in Davos.

EUR/USD short-term technical outlook

The daily chart for the EUR/USD pair shows it trades a handful of pips above a flat 200 Simple Moving Average (SMA), providing dynamic support at around 1.0845. The 20 SMA remains far above the current level, losing its bearish strength but still suggesting bears hold the grip. Finally, technical indicators lost directional strength but remain within negative levels, maintaining the risk skewed to the downside.

The pair is at risk of falling further in the near term. EUR/USD develops below a firmly bearish 20 SMA, which extends its slide below the larger ones. The moving average attracts sellers, currently at around 1.0900. At the same time, technical indicators remain below their midlines, with uneven strength, anyway reflecting the absence of buying interest.

Support levels: 1.0845 1.0800 1.0760

Resistance levels: 1.0900 1.0940 1.0980

View Live Chart for EUR/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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