EUR/USD forecast: Bears await a sustained break below 1.10 handle, German ZEW eyed

The EUR/USD pair managed to find some support ahead of the key 1.10 psychological mark and edged higher on the first day of a new trading week, snapping five consecutive sessions of losing streak. A modest US Dollar pullback from multi-week tops – amid renewed traded uncertainty – turned out to be one of the key factors lending some support to the major. It is worth recalling that the US President Donald Trump said over the weekend that trade talks were going “very nicely,” but there was no agreement yet on rollback of existing tariffs.

Focus remains on trade developments

Apart from a subdued USD demand, the shared currency was further supported by reports that Trump this week is expected to extend the deadline for imposing up to 25% tariffs on European auto imports for another six months. The uptick, however, lacked any strong follow-through and remained capped near 50-day SMA as traders awaited the next development in the US-China trade talks. Hence, the key focus will be on Trump’s appearance at the New York Economic Club later during the US trading session on Tuesday.
 
In the meantime, the release of the German ZEW Survey – expected to rebound from -22.8 to -13.0 in November – will be looked upon for some short-term trading impetus. This will be followed by a scheduled speech by the Fed Governor Richard Clarida, which might influence the USD price dynamics and further collaborate towards producing some meaningful trading opportunities around the major.

Short-term technical outlook

From a technical perspective, the recent slide below the 1.1075 horizontal support has already confirmed a bearish double-top pattern on the daily chart. However, traders might now wait for a sustained break below the 1.10 mark before positioning for any further near-term depreciating move. Below the mentioned handle, the pair is likely to accelerate the fall further towards the 1.0955-50 region before eventually aiming to challenge the 1.0900 round-figure mark.
 
On the flip side, any attempted recovery might continue to confront some supply near the 1.1045-50 region and is closely followed by the double-top neckline support breakpoint and the 1.1100 handle. Momentum beyond the mentioned hurdles, leading to a subsequent strength beyond 100-day SMA, might trigger a short-covering move and lift the pair back towards the 1.1165-70 heavy supply zone.