EUR/USD Forecast: Bears maintain the pressure despite a better market mood

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0186

The EU August Sentix Investor Confidence printed at -25.2, worse than anticipated.
Easing government bond yields and firmer equities weigh on the greenback.
EUR/USD is neutral in the near term, although failure to regain 1.0200 skews the risk to the downside.

Financial markets started the week in a better mood, which weighs on the US dollar. The EUR/USD pair trades around 1.0190, up for the day but unable to recover the 1.0200 threshold. The greenback’s broad weakness is directly linked to easing government bond yields and firmer equities, as investors assess the latest US employment figures, which lifted chances of a more aggressive Federal Reserve, as the sector is strong enough to deal with higher rates. A 75 bps hike for September is back on the table.

Meanwhile, the US will release the July Consumer Price Index next Wednesday, which is expected to have contracted to 8.7% YoY from 9.1% in the previous month. The core reading, however, is foreseen ticking higher, from 5.9% YoY in June to 6.1%.

Earlier in the European session, the EU published August Sentix Investor Confidence, which came worse than anticipated, printing at -25.2 vs the -24.7 forecasted. The soft figure limits EUR strength. The US calendar will remain empty on Monday.

EUR/USD short-term technical outlook

The EUR/USD pair is trading just below the 38.2% retracement of the latest daily slide between 1.0614 and 0.9951 at 1.0205. The daily chart offers a neutral-to-bearish stance, as the pair keeps finding intraday support around a flat 20 SMA. The Momentum indicator is crossing its midline into negative territory, while the RSI indicator consolidates at around 46.

In the near term, and according to the 4-hour chart, the pair is also neutral. It is developing a few pips above converging 20 and 100 SMAs, while below a mildly bearish 200 SMA. Technical indicators, in the meantime, hover around their midlines without directional strength. Buyers are defending the downside around 1.0150, with slides below the latter skewing the risk to the downside.

Support levels: 1.0150 1.0105 1.0070

Resistance levels: 1.0205 1.0240 1.0280

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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