EUR/USD Forecast: Bearish breakout on the make
EUR/USD Current Price: 1.1853
- A dismal market’s mood put pressure on the high-yielding EUR.
- US Federal Reserve chief Powell testified on the CARES Act.
- EUR/USD turned bearish and is set to pierce the current March low at 1.1835.
The EUR/USD pair changed course and fell to a fresh two-week low of 1.1848 amid a dismal market’s mood. European indexes traded in the red, trimming most of their losses ahead of the close, yet affected by persistent turmoil in Turkey, as local stocks plunged after President Erdogan sacked the central bank governor. Wall Street traded in the red, although losses were limited. Meanwhile, US Treasury yields slid to fresh one-week lows, trimming post-Fed’s monetary policy decision gains.
The US published the Q4 Current Account, which printed a deficit of $-188.5 billion as expected, and February New Home Sales, which plummeted by 18.2%, much worse than the -6.5% forecast. US Federal Reserve chair Jerome Powell testified before Congress on the CARES act, alongside Treasury Secretary Janet Yellen. Powell repeated most of what we said last week on the back of the Fed’s monthly announcement. Yellen referred to taxes, and said that the recent stimulus is not funded with tax increases, although she added that "changes to tax policy will help pay for programs on infrastructure."
On Wednesday, Markit will publish the preliminary estimates of its March PMIs. The services sector in the EU is expected to remain in contraction territory while manufacturing output is seen stable in expansion levels. The US will publish February Durable Goods orders, foreseen up by 0.8% vs 3.4% in the previous month. The US Markit PMIs are seen expanding from February readings. The EU will publish March Consumer Confidence, expected at -14.5 from -14.8 in the previous month.
EUR/USD short-term technical outlook
The EUR/USD pair is pressuring the mentioned daily low and poised to extend its decline. It has broken below the 61.8% retracement of its November/January rally, and the risk will remain skewed to the downside as long as it holds below the level, with a steeper decline expected on a break below 1.1835 this month low. Technical readings in the 4-hour chart support the bearish case, as the pair is now trading below bearish moving averages, with the 20 SMA gaining bearish traction around 1.1920. Technical indicators remain within negative levels, with the RSI approaching oversold readings, in line with further slides ahead.
Support levels: 1.1835 1.1790 1.1750
Resistance levels: 1.1885 1.1920 1.1970
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.
