EUR/USD Forecast: Corrective decline continues in the near-term

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.2167

The American dollar pared gains during the US session, retained most of its intraday gains.
EU January Sentix Investor Confidence improved from -2.7 in December to 1.3.
EUR/USD is at risk of extending its latest decline towards the 1.2000 figure.

The EUR/USD pair fell on Monday to 1.2144, its lowest in three weeks, amid persistent dollar’s demand. The market extended Friday’s trading, as there were no fresh catalysts to drive investors. The focus remains on speculation about further fiscal stimulus lifting government debt yields and the greenback advancing alongside. Wall Street traded with a soft tone but managed to recover from intraday lows, putting some pressure on the greenback ahead of the daily close.

The macroeconomic calendar has little to offer this week. The EU published January Sentix Investor Confidence, which improved by more than anticipated from -2.7 to 1.3. The US calendar had nothing to offer. On Tuesday, the Union won’t publish relevant data, while the US will offer some minor reports related to business optimism and employment.

EUR/USD short-term technical outlook

The EUR/USD pair bounced from the mentioned low, but remains in the red, trading in the 1.2170 price zone. The 4-hour chart shows that it met buyers around a bullish 200 SMA, but also that it has broken below the 20 and 100 SMAs, with the shorter accelerating its decline above the longer one. Technical indicators are bouncing from oversold readings, but remain well into negative levels, lacking directional strength. The risk remains skewed to the downside, with the decline set to continue on a break below 1.2125.

Support levels: 1.2125 1.2080 1.2040

Resistance levels: 1.2210 1.2250 1.2300

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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