EUR/USD Forecast: Buyers paused, likely to take their chances on dips

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0901

FOMC Meeting Minutes brought nothing new to the table.
United States has a packed calendar ahead of the long weekend.
EUR/USD turned lower in the near term, slides likely to be contained.

The EUR/USD pair trades around the 1.0900 level, as the US Dollar gathered some strength on Tuesday, extending its modest advance throughout the first half of Wednesday. Financial markets struggle to find a reason to maintain the pace of US Dollar selling as the macroeconomic calendar has little to offer, while the Thanksgiving holiday in the United States (US) will result in limited activity by the end of the week.

The Federal Open Market Committee (FOMC) released the Minutes of the latest Federal Reserve (Fed) meeting, but the document brought nothing new to the table. Fed officials reiterated their concerns about inflation, adding they are willing to take further action if price pressures resume. Once again, policymakers dismissed the odds for soon-to-come rate hikes, repeating monetary policy needs to stay restrictive for a long time to achieve the 2% inflation goal. Finally, the minutes showed officials will continue to base their decisions on incoming data.

The Eurozone did not publish relevant data, but the US will offer some interesting figures. The country will release October Durable Goods Orders, expected to have declined by 3.1%, and Initial Jobless Claims for the week ended November 17, foreseen at 225K. Additionally and ahead of the long weekend, the US will unveil the final estimate for the November Michigan Consumer Sentiment Index, previously calculated at 60.4.

EUR/USD short-term technical outlook

The EUR/USD pair is trading in the red after posting a lower low for the week of 1.0882. The daily chart shows that technical indicators began correcting overbought conditions, gaining downward traction but still holding well above their midlines. Furthermore, the pair keeps developing far above all its moving averages, with the 20 Simple Moving Average (SMA) heading firmly north below directionless longer ones.

Overall, the ongoing slide seems corrective after the pair failed to extend gains beyond the 61.8% Fibonacci retracement of the 1.1275/1.0447 slide at 1.0960. The 50% retracement provides static support at 1.0858.

In the near term, the risk skews to the downside. The 4-hour chart shows that the Momentum indicator crossed its midline into negative territory, while the Relative Strength Index (RSI) indicator heads marginally lower at around 53, suggesting limited selling interest. Finally, EUR/USD is currently below a bullish 20 SMA, while holding well above the longer ones, which also offer upward slopes. Additional declines seem unlikely near term, with buyers likely taking their chances on a slide towards the 1.0860 region.

Support levels: 1.0860 1.0825 1.0780

Resistance levels: 1.0925 1.0960 1.1005

View Live Chart for 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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