EUR/USD Forecast: Correcting higher, but bears are not done

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1576

EU Sentix Investor Confidence improved by less than anticipated in November.
Several US Federal Reserve officials will be on the wires during the American session.
EUR/USD is neutral-to-bearish with solid selling interest aligned in the 1.1650/70 price zone.

The EUR/USD pair trades marginally higher on a quiet Monday, hovering around the 1.1570 level. Demand for the American dollar is decreasing as US government bond yields hover near their recent lows, with that on the 10-year Treasury note currently around 1.47%. The greenback’s decline seems corrective, after the solid advance from last week, following the US Federal Reserve decision and a stronger-than-expected Nonfarm Payrolls report.

Generally speaking, the market’s mood is cautious. Asian and European indexes are in the red, although losses are modest. Wall Street is set to open marginally lower, although with the three major indexes near record highs.

On the data front, the EU published Sentix Investor Confidence, which improved from 16.9 to 18.3 in November, missing expectations of 18.6. The US calendar has no data included, but several Fed officials will be on the wires, including chief Jerome Powell. It seems unlikely that US policymakers could surprise investors after announcing tapering last week.

EUR/USD short-term technical outlook

From a technical point of view, the EUR/USD pair is still at risk of falling. In the daily chart, technical indicators lack directional strength but hold within negative levels, suggesting limited buying interest. The pair, meanwhile, keeps developing below all of its moving averages, with the 20 SMA flat at around 1.1600.

The 4-hour chart shows that technical indicators are advancing, although Momentum keeps developing within negative levels while the RSI is in neutral territory – not enough to support additional gains. The 100 and 200 SMAs are converging in the 1.1610 area, which is the level to clear to see the pair extending its gains today. Sellers are likely waiting, however, in the 1.1650/70 price zone.

Support levels: 1.1550 1.1510 1.1470

Resistance levels: 1.1615 1.1670 1.1710

View Live Chart for the EUR/USD

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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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