EUR/USD Forecast: Bears add, looking for sub-1.0700 levels

EUR/USD Current price: 1.0746

• Federal Reserve’s speakers in the spotlight in the absence of relevant data.
• European Central Bank officials continue to anticipate a potential rate cut in June.
• EUR/USD trades within limited intraday ranges, but lower lows suggest mounting selling interest.

Financial markets have shown little signs of life these days, with the EUR/USD pair still stuck around the 1.0750 mark. The hawkish tone of the Federal Reserve (Fed) was far from a surprise, but it seems speculative interest finally reconciled itself with the idea of higher for longer interest rates and was left clueless. And it is not just the Fed. Give or take, most major central banks had drawn a clear path in which loosening the monetary policy would have to wait until they gained enough confidence on inflation moving towards their goals.

The European Central Bank (ECB) may be the most notorious exception, as ECB officials have been paving the way for a June rate cut amid concerns the tight monetary policy will result in a steep economic setback. Ahead of the June meeting, however, macroeconomic data suggest the economy is doing better. Would the ECB step back from its dovish stance? That could be an interesting scenario moving forward, as trimming rates before the Fed will mean a sharp depreciation of the Euro. But it may be too early to discuss that. It’s, however, relevant as it translates to absent directional strength.

The ECB had a Non-Monetary Policy Meeting early on Wednesday, while Germany published March Industrial Production, which fell 0.4% YoY, better than the 0.6% slide anticipated by market participants. The American session will bring the United States (US) March Wholesale Inventories and several speeches from Fed officials.

EUR/USD short-term technical outlook

The EUR/USD pair is biased lower, although the momentum is absent. It has traded within tight ranges for the last three days, posting lower lows and lower highs, which usually indicate mounting selling pressure. Still, technical indicators gave no clear directional clues. A bearish 200 Simple Moving Average (SMA) provides dynamic resistance around 1.0795, while the 100 SMA also heads marginally lower above it. The 20 SMA, in the meantime, stands below the current level, losing its previously downward strength. At the same time, technical indicators remain above their midlines but without signalling any dominant interest.

In the near term, and according to the 4-hour chart, EUR/USD is neutral-to-bearish. The price is stuck around a flat 200 SMA, while the 20 SMA also lacks directional strength yet above the current level. Technical indicators, in the meantime, head nowhere just below their midlines. The pair would need to run past 1.0810 to shrug off the negative stance, while an acceleration through 1.0700 should open the door for a test of the 1.0660 price zone.

Support levels: 1.0700 1.0660 1.0620

Resistance levels: 1.0810 1.0840 1.0885