EUR/USD Forecast: Dollar reigns alongside uncertainty

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0817

Markit will release April preliminary PMI this Thursday, steeper contractions expected.
Economies not out of the woods as coronavirus-related numbers remain way too high.
EUR/USD under selling pressure near 1.0800 as demand for the greenback remains strong.

The EUR/USD pair has continued to trade within familiar levels this Wednesday, hitting a daily high of 1.0885 amid a better market’s mood, as crude oil prices finally stabilised. Equities turned green, with global indexes posting substantial gains. The greenback initially came under selling pressure with the better performance of equities, but resumed its advance during the American session. The pair fell to 1.0802, a fresh two weeks´ low.

Meanwhile, the coronavirus pandemic runs its course. Major economies remain in lockdown, and despite talks about the possibility of reopening, the fact is that the numbers of new contagions and the death toll, both remain too high. Concerns about a second wave, if activity resumes too soon, have led to extensions of the current measures that mean economic recession. This Wednesday, April Markit will release the preliminary estimates of Services PMI and Manufacturing PMI for the Union and the US. Activity is seen contracting further, although the worst picture comes from Europe. Also, the US will release Initial Jobless Claims for the week ended April 17, foreseen at 4150K.

EUR/USD short-term technical outlook

The EUR/USD pair has broken below the 61.8% retracement of its latest bullish run, although there has been no follow-through. The risk is skewed to the downside, although a steeper decline would be clearer on a break below 1.0790, the immediate support. Technical readings in the 4-hour chart skew the risk to the downside, as the pair is below all of its moving averages, which grind lower, as technical indicators hold within negative levels, lacking directional strength.

Support levels: 1.0790 1.0750 1.0710

Resistance levels: 1.0830 1.0860 1.0890

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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