EUR/USD Forecast: Bears looking to pierce the 1.1020 support level

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1047

The mood soured ahead of United States fresh data that could deter Fed’s path.
The US ISM Manufacturing PMI is foreseen at 47.5 in August, still indicating contraction.
EUR/USD turned bearish in the near term, support at 1.1020.

The EUR/USD pair extended its slide on Tuesday, trading in the 1.1040 region. The US Dollar benefits from a risk-averse environment, with Asian and European shares turning negative and dragging alongside Wall Street’s futures. Speculative interest awaits fresh clues from the United States (US) that could provide fresh insights on what the Federal Reserve (Fed) may do when it meets in September.

The US will release the ISM Manufacturing Purchasing Managers Index (PMI), foreseen in August at 47.5, improving from 46.8 in July. Additionally, S&P Global will publish the final estimate of its August Manufacturing PMI, which is expected to be confirmed at 48. Readings below 50 indicate contraction in the sector, and while the readings may improve from the previous one, they will still reflect struggling businesses' output.

EUR/USD short-term technical outlook

From a technical point of view, the daily chart for the EUR/USD pair shows bears are gaining confidence. The pair is currently battling a mildly bullish 20 Simple Moving Average (SMA), meeting intraday buyers on dips below it. At the same time, the 100 and 200 SMAs aim marginally higher, far below the shorter one. Finally, technical indicators keep gaining downward momentum within positive levels but are getting closer to their midlines. Overall, it is not enough to confirm another leg south, but enough to cancel the odds of a bullish run.

In the near term, and according to the 4-hour chart, EUR/USD is poised to extend its slide. The pair is developing below the 20 and 100 SMAs, with the shorter one crossing below the longer one. The 200 SMA, in the meantime, remains flat at around 1.0975, providing dynamic support. In the meantime, technical indicators lack directional strength but remain below their midlines, suggesting a lack of buying interest.

Support levels: 1.1020 1.0975 1.0940

Resistance levels: 1.1090 1.1145 1.1190

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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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