EUR/USD Forecast: Absent buying interests despite prevalent optimism

EUR/USD Current price: 1.0776

• Asian and European stock markets pressure record highs, weighing on USD demand.
• Holidays in the United States and Canada limit volatility among major pairs.
• EUR/USD holds within familiar levels without clear directional strength.

The EUR/USD pair seesaws around the 1.0770 level, confined to a tight range on Monday. A light macroeconomic calendar and holidays in the United States (US) and Canada limit the market volatility. US markets will remain closed amid Presidents Day, with no activity in stocks or bonds.

During European trading hours, the German Deutsche Bundesbank released the Buba Monthly Report, a document providing a detailed analysis of current and future economic conditions from the bank's viewpoint. The news was discouraging, as it indicated the economy is likely in a recession, noting weak external demand, muted consumption, and cautious investments as the reasons behind the setback.

On a positive note, Asian and European indexes maintain a positive momentum, reflecting prevalent confidence among market participants.

This week's focus will be on the Federal Open Market Committee (FOMC) Minutes, to be released on Wednesday. The Federal Reserve (Fed) announced its decision on monetary policy late in January and cooled down expectations for a March rate cut, triggering panic among market players. The document may shed light on whether a rate cut will come in May.

EUR/USD short-term technical outlook

The EUR/USD pair has made no progress after closing two consecutive weeks around the current level. From a technical point of view, the risk skews to the downside, according to the daily chart. The pair develops below all its moving averages, and the 20 Simple Moving Average (SMA) is about to cross below the 100 SMA, both converging in the 1.0790 price zone. Technical indicators, in the meantime, are neutral-to-bearish within negative levels, suggesting absent buying interest.

For the near term, the 4-hour chart shows EUR/USD is meeting sellers around a mildly bearish 100 SMA, while a bullish 20 SMA keeps heading north below the current level. At the same time, technical indicators have pared their slides, turning neutral within positive levels. The case for a bullish extension will be stronger if the pair extends its advance beyond the 1.0840 level.

Support levels: 1.0740 1.0695 1.0650

Resistance levels: 1.0795 1.0840 1.0885