EUR/USD Forecast: Bearish case to strengthen once below 1.2060

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.2081

Manufacturing output in the EU was upwardly revised in January by Markit.
Attention remains on individual investors’ bets and US stimulus program.
EUR/USD is technically bearish, could extend its slump to 1.1970.

The EUR/USD pair trades in the 1.2080 price zone, down this Monday as the greenback advances against most of its major rivals. Stocks are also up, while US Treasury yields are marginally lower when compared to Friday’s close. The market’s mood is mostly positive, although a certain caution prevails.

Concerns gyrate around news indicating that some US Republican senators have called for President Joe Biden to scale down his stimulus plan. Meanwhile, the individual investors’ frenzy has shifted from equities to silver, with the metal up roughly 11% at the weekly opening.

The shared currency fell despite better-than-expected data. The final version of the European Markit Manufacturing PMIs were upwardly revised, with the German index up to 57.1 from 57 and the Union’s index printing at 54.8. German Retail Sales, however, fell 9.6% MoM in December, much worse than anticipated. The American session will bring the January Manufacturing PMI for the US and the official ISM index, this last, foreseen at 60 from 60.7 in December.

EUR/USD short-term technical outlook

The EUR/USD pair has bottomed for the day at 1.2069, still holding above a major support level at 1.2060, the 38.2% retracement of its November/January rally. The 4-hour chart shows that the risk is skewed to the downside, as the pair is developing below firmly bearish 20 and 100 SMAs. Technical indicators turned south, heading lower within negative levels. A steeper decline could be expected on a break below the mentioned Fibonacci support, with investors eyeing an extension towards 1.1970.

Support levels: 1.2060 1.2015 1.1970

Resistance levels: 1.2145 1.2180 1.2225

View Live Chart for the EUR/USD

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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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