EUR/USD Forecast: Further consolidation looks likely ahead of Fed speakers

• EUR/USD struggles for a firm near-term direction and remains confined in a familiar trading range.
• Investors this week will eye Fed speaks and flash Eurozone PMIs for a fresh directional impetus.

The EUR/USD pair lacked any firm directional bias on Friday and seesawed between tepid gains/minor losses, well within a familiar trading range around mid-1.1800s. Concerns about the second wave of the COVID-19 infections and fading prospects of a sharp V-shaped economic recovery weighed on investors' sentiment. This was evident from a weaker trading sentiment around the equity markets, which coupled with Wednesday's not so dovish FOMC statement drove some haven flows towards the safe-haven US dollar. The greenback was further underpinned by the better-than-expected release of the preliminary Michigan Consumer Sentiment Index, which improved to 78.9 in September from 74.1 previous.

The supporting factors, to a larger extent, were negated by growing optimism over a potential vaccine for the highly contagious coronavirus disease. This coupled with worries that the lack of additional fiscal stimulus measures could halt the current US economic recovery held the USD bulls from placing any aggressive bets. This, in turn, failed to provide any meaningful impetus to the major and led to a subdued/range-bound price action. The pair finally settled nearly unchanged for the second consecutive week and formed a Doji candlestick pattern, indicating a tug of war between bulls and bears.

The pair managed to regain some positive traction on the first day of a new trading week as market participants now look forward the Fed Chair Jerome Powell's comments for a fresh impetus. Powell is also due to testify before the Congressional committees later this week, which, along with scheduled speeches by other influential FOMC members will influence the near-term USD price dynamics. Apart from this, traders will further take cues from Wednesday's release of the Eurozone preliminary PMI reports for September before positioning for the pair's next leg of a directional move.

Short-term technical outlook

From a technical perspective, the emergence of some dip-buying near 50-day SMA favours bullish traders. However, the lack of any strong follow-through buying warrants some caution before positioning for any further appreciating move. Hence, any subsequent positive move is more likely to confront a stiff resistance near the 1.1900 mark. That said, some follow-through buying might trigger some near-term short-covering move and push the pair further beyond the 1.1935-40 supply zone, towards reclaiming the key 1.2000 psychological mark.

On the flip side, the 1.1800 mark now seems to have emerged as immediate support, below which the pair could slide back to the 1.1750 horizontal level. Sustained weakness below, leading a subsequent break through the 1.1735 area (50-DMA), will be seen as a fresh trigger for bearish traders. The pair could then accelerate the fall further towards August monthly swing lows, around the 1.1700-1.1695 region. Failure to defend the 1.1700 mark would now turn the pair vulnerable to prolong the recent corrective slide towards testing the 1.1600 round-figure mark.