EUR/USD Forecast: Bulls may soon give up

EUR/USD Current price: 1.0768

• European Central Bank officials continue paving the way towards a June rate cut.
• Wall Street consolidates Monday’s gains as investors await earnings updates.
• EUR/USD loses the near-term bullish potential, critical support at 1.0700.

Financial markets lack clues on Tuesday, resulting in major pairs trading within familiar levels. The EUR/USD pair hovers around 1.0760, little changed for a second consecutive day. Scarce macroeconomic data exacerbates the quietness around the pair, as neither the Eurozone nor the United States (US) will release relevant figures this week.

Meanwhile, European Central Bank (ECB) policymaker Pablo Hernandez de Cos said interest rates could be cut in June if the price path holds, although he added the ECB is data-dependent and can not commit to a specific rate path. His words did not impact the Euro, as ECB officials have been paving the way for a June rate cut for the last couple of months. Also, Germany published March Factory Orders, which declined  0.4% MoM and 1.9% YoY, limiting the odds for a Euro advance.

Investors keep an eye on stocks and earnings for direction. So far, most Asian and European indexes advanced, but US indexes cannot take advantage of the positive momentum of their overseas counterparts, consolidating Monday’s gains. Also, Fed’s speakers could gather attention, with Federal Reserve Bank of Minneapolis President Neel Kashkari due to offer a speech. The American session will also bring the US May TIPP Economic Optimism index and  March Consumer Credit Change.

EUR/USD short-term technical outlook

As said, EUR/USD is unchanged for a second consecutive day, with a modest downward bias. The daily chart shows the pair remains below a bearish 200 Simple Moving Average (SMA), providing dynamic resistance at around 1.0795. The 100 SMA also heads lower above the longer one, while the 20 SMA maintains its downward slope but below the current level. Generally speaking, moving averages suggest that selling interest is still present. Finally, technical indicators hold within positive levels but turn marginally lower, reinforcing the idea of an upcoming slide yet to be confirmed.

In the near term, EUR/USD is developing above all its moving averages in the 4-hour chart, with the 20  SMA maintaining its bullish slope after crossing above a flat 200 SMA, in line with a bullish extension. At the same time, technical indicators hold above their midlines, although without clear directional strength. The pair would need to advance beyond 1.0810 to turn bullish in the near term. On the contrary, a substantial decline towards 1.0700 is required to confirm a bearish reversal in the upcoming sessions.

Support levels: 1.0750 1.0700 1.0695    

Resistance levels: 1.0810 1.0840 1.0885