EUR/USD Forecast: Bearish breakout around the corner

EUR/USD Current Price: 1.0831

• The US March Consumer Price Index soared to 8.5% YoY, while the core reading hit 6.5%.
• The German ZEW Survey on Economic Sentiment plummeted to -43 in the EU in April.
• EUR/USD trades near its yearly low of 1.0805 and seems poised to extend its slump.

The EUR/USD pair trades near 1.0821, its lowest since early March. The dollar trades mixed across the board, particularly strong against the shared currency amid discouraging German data. The country’s Consumer Price Index was confirmed at 7.3% YoY in March, a multi-decade high. The April ZEW Survey on Economic Sentiment plummeted to -43 for the EU, as prospects of stagflation over the next six months remain. The German Economic Sentiment declined by less than anticipated, down to -41 from -39.3 in the same month.

Across the pond, the US released the March Consumer Price Index, which soared to 8.5% YoY, higher than the 8.4% expected and above the previous 7.9%. Likewise, the core reading printed at 6.5% YoY, slightly above the February reading at 6.4%. The market’s initial reaction was against the greenback, as Wall Street was expecting an even worse reading. Nevertheless, US indexes retreated from their intraday highs, now mixed at around their opening levels.

Meanwhile, government bond yields soared at the beginning of the day, but eased ahead of the US opening, stabilizing below their opening levels. The yield on the 10-year Treasury note currently stands at around 2.71%,  after peaking at 2.836%.

On Wednesday, the EU will not publish relevant data, while the US will publish the March Producer Price Index, foreseen at 10.5% YoY.

EUR/USD short-term technical outlook

The EUR/USD pair is heading into the Asian opening trading near the mentioned daily low and not far from its2022 low at 1.0805. The technical picture is bearish, as the daily chart shows that the pair has extended its slump well below bearish moving averages. At the same time, technical indicators turned south within negative levels, reflecting increasing selling interest.

The 4-hour chart also hints at a bearish continuation, as technical indicators remain within negative levels with uneven bearish strength but without signs of downward exhaustion. Moving averages, in the meantime, head firmly lower, far above the price. The pair has a strong static support area at around 1.0760, the next near-term bearish target.

Support levels: 1.0800 1.0760 1.0720

Resistance levels: 1.0875 1.0930 1.0965

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