EUR/USD Forecast: Bears aiming for a further drop below June 2020 low of 1.1160

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1208

European economic growth jeopardized by a worrying uptick in covid infections.
USD maintains its strength and could reach fresh year highs against its high-yielding rivals.
EUR/USD corrected modestly higher, although technical readings favor a leg south.

The EUR/USD pair trades in the 1.1210 area, marginally higher on Thursday. Financial markets were subject to thin conditions as there was no activity on Wall Street due to the Thanksgiving holiday in the US. Across the Atlantic, European markets were opened, with indexes closing with modest gains. Nevertheless, investors stood cautious, concerned about a possible economic setback amid a worrying uptick in covid infections in all of Europe.

So far, some Eastern European countries opted for strict lockdowns, while France announced on Thursday booster shots, refraining from imposing restrictions. Portugal declared a state of calamity and announced new restrictions due to rise in cases, while Germany is expected to announce a decision on the matter on Friday, as cases in the country stand at record highs.

Data wise, Germany released the second estimate of the Q3 Gross Domestic Product, downwardly revised from 2% to 1.7%. Also, the European Central Bank published the Monetary Policy Meeting Accounts, although the document had no impact on the pair, as it repeated the well-known patient stance from ECB’s policymakers.

On Friday, the European Central Bank President Christine Lagarde is due to speak at the ECB Legal Conference 2021, with no other figures of relevance in the macroeconomic calendar.

EUR/USD short-term technical outlook

The EUR/USD pair retreated from an intraday high of 1.1229 and is still at risk of falling. The daily chart shows that technical indicators are flat within oversold readings, without signs of bearish exhaustion. At the same time, the pair remains below bearish moving averages, with the shorter one, the 20-SMA (red), still heading firmly south.

The 4-hour chart shows that the pair once again met sellers around the bearish 20 SMA, while technical indicators resumed their decline after correcting oversold conditions reflecting bears’ dominance. The immediate support is 1.1205, en route to the 1.1160 price zone, where the pair bottomed in June 2020.

Support levels: 1.1205 1.1160 1.1120

Resistance levels: 1.1250 1.1295 1.1340

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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