EUR/USD Forecast: Bullish potential limited despite spike beyond 1.0900

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0868

Coronavirus-related headlines continue to define the market’s sentiment.
US equities set to recover some ground after two days of substantial losses.
EUR/USD unable to attract buyers, bearish case firmer once below 1.0810.

The shared currency has extended its recovery to 1.0908 against its American rival this Wednesday, despite prevalent risk-off mood. Coronavirus-related fears keep high-yielding assets under pressure, although the greenback is also out of the market’s favour, as collapsing government bond yields fuel fears of a possible US recession. The EUR/USD pair, however, has been unable to sustain its early gains and heads into Wall Street’s opening trading flat for the day around 1.0870.

The macroeconomic calendar has been quite scarce so far this Wednesday, with no data released in the Union. The US will publish later today January New Home Sales, foreseen up by 3.5% in the month. Meanwhile, US indexes are posting modest recoveries ahead of the opening.

EUR/USD short-term technical outlook

The EUR/USD pair has been unable to advance beyond the 38.2% retracement of its latest slump at 1.0900, while the 4-hour chart also shows that a bearish 100 SMA limited the upside. The 20 SMA continues advancing below the current level, converging with the 23.6% retracement of the mentioned advance at 1.0850. Technical indicators, in the meantime, ease within positive levels. Overall, the pair is neutral, with the risk of a steeper decline increasing on a break below 1.0810.

Support levels: 1.0850 1.0810 1.0770

Resistance levels: 1.0900 1.0935 1.0980

View Live Chart for the EUR/USD

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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