EUR/USD Forecast: Dollar’s corrective decline may soon be over

EUR/USD Current Price: 1.1793

• Equities rallied on Friday, while US Treasury yields remained subdued.
• The number of new coronavirus contagions is on the rise in the US and the EU.
• EUR/USD is at risk of falling further as long as below the 1.1890 price zone.

The EUR/USD pair bounced modestly on Friday to finish the week in the red at 1.1793. The dollar eased on the back of a better market mood that drove equities higher in the last two trading sessions of the week. Wall Street surged ahead of the close, with the three major US indexes settling near record highs, while government bond yields remained subdued.

European data was generally encouraging, as the March German IFO survey showed that Business Climate improved from  92.7 in February to 96.6. US data, on the other hand, was mixed, as February core PCE unexpectedly shrank to 1.4% from 1.5%, while Personal Income printed at -7.1% and Personal Spending at -1%. The March Michigan Consumer Sentiment Index was upwardly revised to 84.9.  Coronavirus concerns remained ignored by traders, with rising cases at both shores of the Atlantic.

The week will start with a light macroeconomic calendar, as the EU has no data scheduled, while the US will publish the March Dallas Fed Manufacturing Business Index.

EUR/USD short-term technical outlook

The EUR/USD pair holds near its yearly low at 1.1761, and the daily chart suggests that further declines are still in the docket. The pair develops below all of its moving averages, with the 20 SMA maintaining its firm bearish slope. Technical indicators have bounced from oversold readings with uneven strength, suggesting a limited bullish momentum. The 4-hour chart shows that sellers surged on approaches to a bearish 20 SMA, currently around 1.1810, while technical indicators resumed their declines within negative levels.

Support levels: 1.1760 1.1720 1.1680

Resistance levels: 1.1810 1.1850 1.1890

View Live Chart for the EUR/USD