EUR/USD Forecast: Bears are nowhere near giving up

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0886

The US March Consumer Price Index is expected to be “elevated,” according to the White House.
Global indexes edged lower amid geopolitical tensions and aggressive central banks.
EUR/USD retains its soft tone and could soon pierce the year’s low at 1.0805.

The EUR/USD pair peaked on Monday at 1.0932 but ended the day in the 1.0880 price zone, as the dominant dismal mood maintained the dollar on the winning side throughout the second half of the day. The dollar gapped lower against most of its major rivals at the beginning of the day, despite the Eastern European crisis putting the world upside down. Tensions between Russia and Ukraine and Western nations’ response to the situation keep fueling commodity prices, which in turn has sent inflation to multi-decade highs.

Regarding the Consumer Price Index, the US will release March data on Tuesday, and the White House has already anticipated they are expecting it to be “elevated.” Germany will also unveil the March CPI and the April ZEW Survey on Economic Sentiment. On Monday, the focus was on Fed speakers, with most of them paving the way for a 50 bps rate hike.

Ahead of the daily close, Wall Street indexes trade in the red, following the lead of its overseas counterparts, while US government bond yields stand near fresh multi-year highs. The 10-year Treasury note yields 2.78%, while that on the 2-year note hovers around 2.50%.

EUR/USD short-term technical outlook

The EUR/USD pair trimmed early gains and trades at around Friday’s close. Technical readings in the daily chart suggest there is room for further declines, as the pair trades below all of its moving averages. Technical indicators hold within negative levels, heading marginally lower, in line with the dominant bearish trend.

The 4-hour chart shows that the pair is currently struggling to overcome a mildly bearish 20 SMA, while technical indicators remain within negative territory, lacking directional strength. Overall, the risk remains skewed to the downside, with a slide below 1.0870, favoring a retest of the year low at 1.0805 and even lower.

Support levels: 1.0870 1.0830 1.0805

Resistance levels: 1.0930 1.0965 1.1020

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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