EUR/USD Forecast: Key technical levels hold as focus shifts to US data

EUR/USD has gone into a consolidation phase around 1.1600 ahead of key events.
1.1570 is the last line of defence before EUR/USD can target 2021 lows.
Euro bulls are hoping for a hawkish ECB surprise.

Eren Sengezer FXStreet

EUR/USD has been moving up and down in a tight channel around 1.1600 since Tuesday with investors gearing up for the European Central Bank's (ECB) policy announcements and high-tier data releases from the US.

Although the ECB is widely expected to leave its key rates unchanged on Thursday, President Christine Lagarde could battle against the market pricing of a 10 basis points rate hike by next summer. Moreover, the worsening economic outlook in the euro area is likely to cause ECB policymakers to keep a dovish tone. In short, it would be a big surprise if the ECB were to take a hawkish step and help the common currency find demand.

Earlier in the day, the data from Germany showed that the GfK Consumer Confidence Index improved to 0.9 in November from 0.4 in October but this reading had little to no impact on the shared currency's performance against the greenback.

The US economic docket will feature September Durable Goods Orders and Trade Balance reports. Ahead of Thursday's third-quarter GDP reading, however, these data are not expected to trigger a meaningful reaction.

Durable Goods Orders Preview: Five scenarios to trade the event with EUR/USD.

In the meantime, market participants could keep a close eye on technical levels to determine short-term trading opportunities.

EUR/USD technical analysis

The Relative Strength Index (RSI) indicator on the four-hour chart is moving sideways a little below 50, reflecting EUR/USD's indecisiveness in the near term.

The initial support on the downside is located at 1.1600 (psychological level, 100-period SMA). The pair dropped below that level on Wednesday but didn't have a difficult time recovering. A daily close below 1.1600, however, could attract sellers and cause the pair to slide toward 1.1570 (static level) and 1.1525 (2021 low).

On the upside, resistance at 1.1620 (Fibonacci 23.6% retracement September downtrend, 50-period SMA) stays intact ahead of 1.1650 (200-period SMA) and 1.1670 (Fibonacci 38.2% 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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