EUR/USD Forecast: Consolidating near yearly lows

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0909

EU Industrial Production fell in December, limiting the bullish potential of the EUR.
US Federal Reserve Chair Powell to testify for a second consecutive day.
EUR/USD neutral-to-bearish in the short-term, 1.0878 critical support.

The market mood continues to improve despite lingering coronavirus concerns, yet the shared currency seems immune to renewed demand for high-yielding assets. The EUR/USD pair hovers around 1.0910 for a second consecutive day, meeting sellers in the 1.0920 price zone. EU data came in worse-than-anticipated, adding pressure on the Euro. December Industrial Production was down by 2.1% monthly basis, and by 4.1% when compared to a year earlier.

Meanwhile, the coronavirus keeps taking its deadly toll, although inside China. The number of deceases has surpassed 1,100 while there are over 44,000 cases, most of them within the country. Equities, however, trade firmly in the green, while government bond yields recover, reflecting the upbeat sentiment.

The US published MBA Mortgage Applications for the week ended February 7, which were up by 1.1%, after advancing 5.0% in the previous week. Federal Reserve Chair’s Powell will testify for a second day before the Congress, although given that he will repeat his Tuesday’s statement, the market is expecting it to be a non-event.

EUR/USD short-term technical outlook

The EUR/USD pair is unable to attract speculative interest ever since the week started, offering a neutral stance. Still, and given that the pair is near yearly lows, the risk is skewed to the downside. In the 4-hour chart, it continues to develop below firmly bearish moving averages, with the 20 SMA at around 1.0930. The Momentum indicator eases within negative levels while the RSI stabilized around 34, all of which supports the bearish case. A critical support level comes at 1.0878, the low from 2019.

Support levels: 1.0875 1.0840 1.0810

Resistance levels: 1.0930 1.0965 1.1000

View Live Chart for the 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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