EUR/USD Forecast: bearish potential supports test of 1.1120
Following an limited upward corrective movement during the Asian session, the common currency is back under pressure in the European morning, despite the greenback maintains a soft tone against most of its other rivals. A bank holiday in Japan has kept majors within familiar ranges, while a scarce calendar in Europe and the US suggests limited action for this Monday, moreover with the FOMC economic policy meeting scheduled for this Wednesday. The US Federal Reserve is generally expected to remain on-hold, but also hawkish enough to leave doors open for a rate hike before the year end.
Data released so far in Europe showed that the EU current account recorded a surplus of €21.0 billion in July, below the €27.2 billion expected. For the American session, a minor housing index is scheduled.
From a technical point of view, the EUR/USD pair in its 4 hours chart presents a bearish tone, with the price holding not far from a daily low of 1.1150, and below its moving averages that are finally gaining some directional strength, turning south in the 1.1200/20 region. Indicators in the mentioned time frame hover near oversold readings, with limited directional strength.
The immediate support comes at 1.1120, August 31st daily low, with a break below it probably seeing the pair extending its decline in the short term down to the 1.1060/80 price zone. Further declines seem unlikely for today, although with the correct trigger, the pair can go down to the 1.1030 region.
The daily high was set at 1.1173, and a recovery beyond it could see the price spiking up to 1.1210, although selling interest around this last will likely prevent the pair from advancing further.
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.
