EUR/USD Forecast: Investors keep seeking safety

EUR/USD Current Price: 1.1773

• Risk-off dominates financial markets to the benefit of the greenback.
• Stocks are sharply down, Wall Street is poised to open the red.
• EUR/USD is pressuring fresh three-month lows and poised to extend its slump.

The American dollar is up this Monday as investors seek safety. The EUR/USD pair fell to 1.1763, its lowest since early April, and holding nearby ahead of Wall Street’s opening. Soaring demand for government bonds sent yields down, with that on the US 10-year Treasury note currently at 1.22%. Stocks are firmly down in Europe, dragging US futures lower.

There is no particular reason behind the sour mood but a combination of global factors. In Europe, mounting tensions around Brexit and the coronavirus Delta variant top the list, although the UK has fully reopened in what they called “freedom day.” In the US, soaring inflation coupled with a dovish Federal Reserve seems to be the main cause of tensions.

On the data front, There’s not much to take care of. The EU published May Construction Output, which was up 0.9% MoM and 13.6% YoY. The US will publish the June NAHB Housing Market Index, expected at 82.  

EUR/USD short-term technical outlook

The EUR/USD pair is developing inside a descendant channel, maintaining the bearish tone in the near-term and poised to extend its slide. The 4-hour chart shows that it met intraday sellers around a directionless 20 SMA, although the longer moving averages maintain their bearish slopes well above it. Technical indicators stand at daily lows within negative levels, with moderated bearish strength. The next relevant support and the probable bearish target is 1.1720.

Support levels: 1.1760 1.1720 1.1685

Resistance levels: 1.1840 1.1885 1.1920

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