EUR/USD Forecast: Bearish case firmer once below 1.0988

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1022

Robust US data and renewed hopes of a US-China trade deal boosted the dollar.
European manufacturing output stagnated at multi-year lows.
EUR/USD technically bearish trading just above the 1.1000 figure.

A dull week finished with a bang for the greenback, which appreciated sharply against most major rivals on solid local data and renewed hopes about the US-China trade deal. Disappointing macroeconomic data elsewhere added to the dollar’s rally, as European figures out on Friday came in below the market’s expectations. The preliminary November estimates of Markit PMI for the EU showed that manufacturing output bounced modestly, with the index up to 46.6 from 45.9 previously, although services activity decelerated to 51.5 from 52.2. In the US, on the other hand, the numbers were upbeat, as the Manufacturing PMI printed at 52.2 while the Services PMI came in at 51.6, surpassing both the October final readings and the market’s expectations. Also, the final version of the US November Michigan Consumer Sentiment index came in at 95.6, better than the preliminary estimate of 95.7. Finally, US President Donald Trump said a trade deal with China was "potentially very close."

This Monday, Germany will release the November IFO survey on Business Climate, seen bouncing from 94.6 to 95. The US is set to publish minor data, including the October Chicago Fed National Activity Index and the Dallas Fed Manufacturing Business Index.

EUR/USD short-term technical outlook

The EUR/USD pair settled around 1.1020 after hitting a weekly high of 1.1096 on Thursday, not far from November’s low at 1.0988. This last, it’s also the 61.8% retracement of the October rally, a relevant and immediate support. In the daily chart, the picture is bearish, as the pair was rejected by sellers aligned around its 100 DMA, while technical indicators stand within negative levels with uneven downward strength. In the 4-hour chart, the downward potential is even stronger, with technical indicators offering bearish slopes near oversold levels, and the pair developing far below all of its moving averages.

Support levels: 1.0985 1.0950 1.0915

Resistance levels: 1.1065 1.1110 1.1145

View Live Chart for the EUR/USD

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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