EUR/USD Forecast: Dollar breaths, but it’s still weak

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1809

Month-end flows gave the greenback the chance of recovering some ground.
US CB Consumer Confidence contracted by more than anticipated in August to 113.8.
EUR/USD retreated towards 1.1800, further losses still unclear.

The EUR/USD pair retreated from a multi-week high of 1.1844 to currently flirting with the 1.1800 level, as the American currency recovered on the back of month-end flows and despite poor US data. The US published August CB Consumer Confidence, which plunged to 113.8 in August from 129.1 previously, amid concerns related to the spread of the coronavirus Delta variant. Also, the Chicago Purchasing Managers’ Index for the same month, contracted by more than anticipated, to66.8 from 73.4 in the previous month.

On the other hand, European data was upbeat. The German Unemployment rate contracted to 5.5% in August, while the EU Consumer Price Index was confirmed at 1.6% YoY in August, according to preliminary estimates. On Wednesday, Germany will release July Retail Sales, while Markit will unveil the final versions of its Manufacturing PMIs. The US will publish the official ISM Manufacturing PMI and the ADP report on job creation, expected to print at 613K.

EUR/USD short-term technical outlook

The EUR/USD pair settled below the 61.8% retracement of its latest daily slump at 1.1820, the immediate resistance level. The 4-hour chart shows that the pair holds above all of its moving averages, with the 20 SMA heading firmly higher and crossing above the longer ones. Meanwhile, technical indicators are retreating from overbought readings, but are currently flat and holding within positive levels. The pair can turn bearish on a break below 1.1780, the 50% retracement of the mentioned daily decline.

Support levels: 1.1780 1.1745 1.1700

Resistance levels: 1.1820 1.1850 1.1890

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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