EUR/USD forecast: Awaits a break below double-top neckline support near 1.1070-60 region

The EUR/USD pair remained under some heavy selling pressure for the second consecutive session on Tuesday and tumbled below the 1.1100 round-figure mark, erasing last week's positive move. A strong follow-through US Dollar buying interest, supported by growing optimism over a possible US-China trade deal later this month, was seen as one of the key factors exerting pressure on the major. Adding to this hopes that Trump administration could roll back some of the tariffs on Chinese goods – as a part of "phase one" deal – boosted the global risk sentiment. The same was evident from an intraday upsurge in the US Treasury bond yields, which further underpinned the USD demand.

Remains at the mercy of USD price dynamics

The greenback on Tuesday got an additional boost from a survey on the US service sector, which showed that business sentiment had improved in October from a three-year low in September. The US ISM non-manufacturing sector index bettered market expectations and rose to 54.7 from 52.6 previous. The data came on the back of Friday's strong US jobs report and might have dampened prospects for any further aggressive monetary policy easing by the Fed, seen as a welcome sign for USD bulls. Other data released on Tuesday showed that the US trade deficit widened -4.7% MoM to $52.5 billion in September, albeit did little to dent a strong bullish sentiment surrounding the buck.
 
The pair remained on the defensive through the Asian session on Wednesday and held near three-week lows as market participants look forward to the final Euro-zone services PMI prints for some short-term impetus. This coupled with some second-tier releases – German factory orders and Euro-zone retail sales – might also influence the shared currency and produce some short-term trading opportunities. Meanwhile, the US economic docket lacks any major market-moving economic releases and hence, traders are likely to take cues from a scheduled speech by the Chicago Fed President Charles Evans later during the early North-American session.

Short-term technical outlook

From a technical perspective, repeated failures near the 1.1175-80 region seemed to have constituted towards the formation of a bearish double-top pattern on the daily chart. The overnight slide dragged the pair towards an important horizontal (double-top neckline) support near the 1.1070-60 region, which might now act as a key pivotal point for short-term traders. Below the mentioned support, the pair is likely to accelerate the slide further towards challenging the key 1.10 psychological mark with some intermediate support near the 1.1030-25 region.
 
On the flip side, any attempted bounce back above the 1.1100 handle now seems to confront some fresh supply near 100-day SMA, around the 1.1120 region. A sustained move back above the said barrier might assist the pair to make a fresh attempt towards clearing the 1.1175-80 supply zone. A decisive breakthrough now seems to set the stage for a move beyond the 1.1200 round-figure mark towards testing the 1.1230-35 intermediate resistance. The momentum could further get extended towards the 1.1275-80 region before the pair eventually aims towards reclaiming the 1.1300 handle.