EUR/USD Forecast: Near-term sellers could push the pair towards 1.0880

Valeria Bednarik FXStreet

EUR/USD Current price: 1.0938

The US Dollar gains ground despite Treasury yields retreating further.
US and EU Consumer Confidence stand out in an otherwise quiet American session.
EUR/USD gains bearish traction in the near term, could fall through 1.0900.

The US Dollar is in better shape on Wednesday, advancing against most major rivals. EUR/USD eased from its weekly peak at 1.0987 and trades in the 1.0930 region, with the market’s volatility limited ahead of the winter holidays and a United States (US) inflation update.

The USD advances despite Treasury yields continuing to retreat. The 10-year note offers 3.87% ahead of the opening, down 5 basis points (bps) and at fresh multi-week lows. Meanwhile, the 2-year note yield shed 7 bps at 4.36%.

Meanwhile, the Eurozone released minor figures. The October seasonally adjusted Current Account posted a surplus of €33.8 billion, better than the €31.2 billion from September. Also, Construction Output in the same month declined 1% MoM, worsening from the previous 0.9% advance. The EU will later release the preliminary estimate of December Consumer Confidence, while the US will publish December CB Consumer Confidence and November Existing Home Sales.

It is worth adding that the USD also benefited from the GBP/USD slide, as the British Pound retreated sharply following the release of softer-than-anticipated inflation figures. Finally, European stocks trade mixed, limiting demand for high-yielding currencies.

EUR/USD short-term technical outlook

The EUR/USD pair trimmed most of its Tuesday’s gains, although the bearish potential remains limited according to technical readings in the daily chart. The pair keeps developing above all its moving averages, with the 20 Simple Moving Average (SMA) currently converging with the 23.6% Fibonacci retracement of the 1.0447/1.1016 rally at around 1.0880. At the same time, the Momentum indicator aims marginally higher within neutral levels, while the Relative Strength Index (RSI) indicator turned south above its midline, suggesting the slide may continue.

In the near term, and according to the 4-hour chart, however, EUR/USD is poised to extend its slide. It is currently pressuring from above a bearish 20 SMA, which reflects a firmer selling interest. Finally, technical indicators also gyrated south but so far remain above their midlines. The slide may likely accelerate on a break below 1.0915, the immediate support level.

Support levels: 1.0915 1.0880 1.0845

Resistance levels: 1.0965 1.1000 1.1040

View Live Chart for EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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