EUR/USD Forecast: Bears lead in thin market conditions

EUR/USD Current price: 1.0779

• Most European markets celebrate Easter Monday, maintaining major pairs within tight ranges.
• After the American opening, the United States will release the March ISM Manufacturing PMI.
• EUR/USD nears March low at 1.0767 with a firmer near-term downward tone.

The EUR/USD pair trades uneventfully in a holiday-thinned session, hovering around the 1.0780 level. Most Asian and European markets were closed on Easter Monday. In Canada, the holiday is observed in some provinces, while the United States (US) does not celebrate the date, meaning activity should become more interesting in the American session.

Stocks traded mixed in Asia, with the Japanese Nikkei 225 plummeting after the country published the Q1 Tankan report. This report indicated a sharp decline in business sentiment as the outlook contracted for manufacturers and service providers. On the contrary, Chinese stocks advanced following the release of the March Caixin Manufacturing PMI, which improved more than anticipated to 51.1 from 50.9 in February.

The upcoming session will bring the official US ISM Manufacturing PMI, foreseen in March at 48.4, better than the previous 47.8. S&P Global will release the final estimate of the Manufacturing PMI for the same month, previously at 52.5.

EUR/USD short-term technical outlook

The EUR/USD pair is confined to a 20 pips range below 1.0803, the 61.8% Fibonacci retracement of the 1.0694/1.0981 rally, suggesting bears retain control. Technical readings in the daily chart support a downward extension as technical indicators grind lower within negative levels. Indicators lack bearish momentum amid the absence of volume. Meanwhile, EUR/USD extends its slide below all its moving averages, which stand directionless. The 200 Simple Moving Average (SMA) converges with the 50% retracement of the mentioned rally at around 1.0840, reinforcing the resistance level.

The near-term bearish potential is firmer. The 4-hour chart shows the 20 SMA accelerated south above the current level while below the longer ones. At the same time, technical indicators gain downward traction within negative levels, supporting another leg lower on a break below Friday’s low at 1.0767.

Support levels: 1.0765 1.0720 1.0680

Resistance levels: 1.0805 1.0840 1.0875