EUR/USD Forecast: Bears aiming to take the 1.1700 level

EUR/USD Current Price: 1.1720

• Investors await news from the US Senate and the bipartisan infrastructure bill.
• The German ZEW survey showed that Economic Sentiment fell to 40.4 in August.
• EUR/USD is bearish and could extend its decline despite extreme oversold conditions.

The EUR/USD pair trades near a fresh multi-month low at 1.1715, as demand for the greenback remains solid, while the shared currency was affected by poor local data. Germany released the August ZEW Survey, which showed that Economic Sentiment in the country sharply contracted to 40.4 vs the expected 56.7. The assessment of the current situation printed at 29.3, below the 30 forecast. For the EU, Economic Sentiment plunged to 42.7 from 61.2, well below the 72 expected.

Meanwhile, US Treasury yields tick higher, while global indexes seesaw between gains and losses around their opening levels, as investors await a catalyst. Later today, the US Senate will vote on the $1 trillion bipartisan infrastructure bill, which can boost the market’s sentiment. Nevertheless, the attention is centred on US inflation figures, to be released on Wednesday.

The US published the NFIB Business Optimism Index, which printed at 99.7 in July, below the previous 102.5. The country also released the preliminary estimate of Q2 Nonfarm Productivity, which resulted at 2.3%, and Unit Labor Cost up by 1%, both missing the market’s expectations.

EUR/USD short-term technical outlook

The EUR/USD pair keeps approaching the 1.1703 level, March monthly low. The near-term picture is bearish, although the pair is oversold. The 4-hour chart shows that it keeps developing well below a firmly bearish 20 SMA, accelerating its slide below the longer ones. Technical indicators hold within extreme readings and still heading south, in line with at least a test of the mentioned level.

Support levels: 1.1705 1.1660 1.1620.

Resistance levels: 1.1750 1.1790 1.1830

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