EUR/USD Forecast: Bulls to retain control if 1.0820 is confirmed as support
- EUR/USD has advanced above 1.0800 following a quiet Asian session.
- ECB commentary and risk flows help EUR/USD edge higher.
- Near-term technical outlook suggests that sellers remain on the sidelines.
After having closed in positive territory near 1.0800 on Monday, EUR/USD has continued to stretch higher early Tuesday. 1.0820 aligns as key technical level and buyers could remain interested once that level is confirmed as support.
The risk-positive market environment on Monday made it difficult for the US Dollar to keep its footing and allowed EUR/USD to stretch higher.
Additionally, comments from European Central Bank (ECB) officials reiterated their willingness to stay focused on battling inflation. Policymaker Mario Centeno noted that the size of the next rate hike will depend on data and Isabel Schnabel said that they had no real concerns about financial stability risks, adding that there were no signs of weakening in the labour market.
Later in the session, ECB President Christine Lagarde will deliver a speech at the opening ceremony of the Bank for International Settlements Innovation Hub Eurosystem Centre. She is not expected to comment on the policy outlook.
The US economic docket will feature the Conference Board's Consumer Confidence Index for March. In February, the one-year consumer inflation rate expectation component of the survey declined to 6.3% from 6.7% in January. A similar decline could feed into the expectation that the Fed will keep its policy rate unchanged at the next policy meeting and put additional weight on the US Dollar and vice versa.
US Consumer Confidence Preview: No good news for Americans.
Meanwhile, US stock index futures trade mixed in the European session. In case risk flows dominate the markets in the second half of the day, EUR/USD should hold its ground. On the other hand, a negative shift in risk perception is likely to limit the pair's upside.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart stays near 60, suggesting that EUR/USD has more room on the upside before turning technically overbought. At the time of press, the pair was trading within a few pips of 1.0820, where the Fibonacci 23.6% retracement of the latest uptrend is located. Once that level is confirmed as support, additional gains toward 1.0870 (static level) and 1.0900/1.0910 (psychological level, end-point of the uptrend) could be witnessed.
On the downside, the 20-period Simple Moving Average (SMA) acts as dynamic support at 1.0800 ahead of 1.0760 (Fibonacci 38.2% retracement, 50-period SMA) and 1.0720 (Fibonacci 50% retracement).
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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
