EUR/USD Forecast: Confident bears aim to pierce 1.0600
EUR/USD Current Price: 1.0639
- Geopolitical tensions continue to weigh on the market mood.
- US S&P Global PMIs came in better than anticipated but hinted at continued price pressures.
- EUR/USD extends its intraday slide ahead of the Asian opening, hinting at another leg south.
The EUR/USD pair shed some ground on Tuesday to settle in the 1.0650 price zone. The US Dollar advanced just modestly despite a clearly risk-averse environment. The market focus remained on geopolitical tensions, as tensions between the US and Russia escalated in the last 24 hours. The latest on the matter came from Secretary of State Antony Blinken, who said the United States suspects China is considering providing military support to Russia. Moscow responded by suspending its nuclear arms treaty with the US and pledging to maintain its military actions in Ukraine.
European data released earlier today fell short of impressing market participants. S&P Global published the preliminary estimates of its February PMIs, which showed that manufacturing output contracted from the previous month. The German index came down to 46.5, while the EU one printed at 48.5. On the other hand, services activity improved more than anticipated, with the EU Services PMI up to 53.0, an eight-month high, and the German Services PMI reaching 51.3. The Composite PMI for both economies surpassed the 50 level, indicating economic expansion.
On a positive note, Germany published the February ZEW Survey, which showed that Economic Sentiment in the country improved to 28.1, while for the whole EU, it came in at 29.7, both beating expectations.
Across the pond, the US S&P Global PMIs beat expectations, signalling the economy remains resilient. Still, manufacturing output remained in contraction territory, with the respective index up from 46.9 in January to 47.8 in February. The Services PMI surged to 50.5, much better than anticipated. The official release noted that “firms continued to seek to pass on greater input costs to customers through hikes in output charges. The rise in selling prices was the quickest for four months and strong overall,” a bad sign for those looking for the US Federal Reserve to pivot on monetary policy. Persistent inflationary pressures put weight on stock markets, with Wall Street sharply down after the long weekend.
On Wednesday, Germany will publish the final reading of the January Consumer Price Index and the February IFO survey on Business Climate. The US, on the other hand, will release the FOMC Meeting Minutes.
EUR/USD short-term technical outlook
The EUR/USD pair pressures its daily lows ahead of the Asian opening, a sign of persistent selling interest. The daily chart shows that the 20 Simple Moving Average (SMA) gains downward traction above the current level, and approaching a strong static resistance level, the 61.8% Fibonacci retracement of the 2022 decline at 1.0745. Technical indicators, in the meantime, head firmly south within negative levels and at fresh multi-month lows, in line with further slides ahead.
The 4-hour chart also supports a downward continuation. A bearish 20 SMA limits advances while gaining bearish traction below the longer ones. At the time being, the Momentum indicator turned flat at around its midline, while the Relative Strength Index (RSI) indicator accelerated lower, currently at around 39. The bearish case will become firmer on a break below the current February low at 1.0612.
Support levels: 1.0610 1.0570 1.0525
Resistance levels: 1.0700 1.0745 1.0790
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.
