EUR/USD Forecast: Euro could extend slide if 1.1300 support fails

EUR/USD has been struggling to shake off the bearish pressure.
Additional losses are likely in case 1.1300 turns into resistance.
Focus shifts to ECB President Christine Lagarde's speech.

Eren Sengezer FXStreet

EUR/USD has suffered heavy losses late Friday and started the new week on the back foot. The souring market mood is making it difficult for the shared currency to find demand and the pair is likely to extend its slide unless risk flows return.

The negative shift witnessed in market sentiment helped the greenback find demand ahead of the weekend and the US Dollar Index (DXY) managed to register weekly gains.

Heightened fears over a military conflict between Ukraine and Russia force investors to stay away from risk-sensitive assets at the beginning of the week, not allowing EUR/USD to stage a rebound. Meanwhile, Germany's DAX 30 and the Euro Stoxx 50 indexes are both down more than 2.5%.

Later in the session, European Central Bank President Christine Lagarde will deliver a speech. In an interview with Redaktionsnetzwerk Deutschland last week, Lagarde argued that raising rates would not solve the inflation problem and said that they don't want to "choke off the recovery." In case Lagarde sounds less hawkish than she did at the ECB's press conference on February 7, the pair could face additional bearish pressure.

The US economic docket will not be featuring any high-tier data releases and the risk perception is likely to impact the dollar's valuation. St Louis Fed President James Bullard will be speaking in an interview with CNBC in the early American session.

EUR/USD Technical Analysis

The near-term technical outlook suggests that sellers dominate EUR/USD's action to start the week. The Relative Strength Index (RSI) indicator on the four-hour chart is now below 40 and the pair is trading below the 100-period and 200-period SMAs.

On the downside, 1.1300 (psychological level, Fibonacci 50% retracement of the latest uptrend) aligns as the first support. In case this level turns into resistance, the next bearish target aligns at 1.1260 (Fibonacci 61.8% retracement).

The first technical hurdle is located at 1.1320 (100-period SMA) before 1.1340 (200-period SMA, Fibonacci 38.2% retracement) and 1.1370 (Fibonacci 23.6% retracement).

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Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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