EUR/USD Forecast: Bulls about to give up

EUR/USD Current Price: 0.9971

• German data brought encouraging surprises but could not help the EUR.
• Caution persists as market players await policymakers' words in the Jackson Hole Symposium.
• EUR/USD remains vulnerable in the near term and could slide below 0.9900.

The EUR/USD pair ends a third consecutive day with little change in the 0.9970 price zone, down from an intraday high of 1.0032. The dollar shed some ground throughout the first half of the day, weighed by easing government bond yields and a better market mood, recovering ahead of the US opening following better-than-expected US data. Still, financial markets saw limited action as the Jackson Hole Economic Symposium kicked in, with several policymakers expected to provide some hints on future economic policies on Friday.

Data-wise, Germany released the Q2 Gross Domestic Product, which rose by 1.7% YoY, better than the 1.4% previously estimated. In the quarter, it was up by 0.1%, revised from 0% previously. Also, the August IFO survey showed the Business Climate reached 88.5, better than the 86.8 expected. Expectations and the assessment of the current situation were better than anticipated.

Also, The European Central Bank released the minutes of its latest meeting, which showed that a "very large number" of Governing Council members agreed that it was appropriate to raise key rates by 50 basis points and that it was "appropriate to take further steps on the path of monetary policy normalisation."

US data was also encouraging, as the second estimate of the Q2 GDP was upwardly revised from -0.9% to -0.6%. Additionally, Initial Jobless Claims for the week ended August 19 declined to 243K, beating the market expectations.  

EUR/USD short-term technical outlook

The daily chart shows that buying interest is still limited, as the pair remains well below bearish moving averages. The long upward wick in the current candle suggests bulls may soon give up. Meanwhile, the RSI indicator stands directionless around 34, while the Momentum indicator ticked higher but remains well below its midline.

The 4-hour chart shows mounting selling pressure. After breaking above it, the pair is currently pressuring a bearish 20 SMA, a few pips below the current level. At the same time, technical indicators turned sharply lower, the Momentum now developing around its midline, but the RSI is already within negative levels. Finally, the 100 SMA crosses below the 200 SMA, converging around 1.0150.

Support levels:  0.9920 0.9880 0.9840  

Resistance levels: 1.0010 1.0050 1.0105

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