EUR/USD Forecast: Nearing critical support, increased odds of losing 1.10

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1089

German ZEW survey to show sentiment improved in the country this January.
The dollar maintains the strength triggered by positive data last week.
EUR/USD could extend its decline to 1.0980 on a break below 1.1065.

The EUR/USD pair has fallen to a fresh January low of 1.1076, recovering just modestly during the American afternoon, as market activity was restricted by a holiday in the US. There was no major catalyst for the decline, but the greenback extending the positive momentum triggered last week by better-than-expected US data.

Germany released the December Producer Price Index, which rose by 0.1% MoM, meeting the market’s expectations, while the yearly reading came in at -0.2%, better than the -0.6% expected, although the figures failed to impress.

This Tuesday, Germany will release the January ZEW Survey. The Economic Sentiment is foreseen at 15 in the country, and 5.5 in the EU, while the assessment of the current situation in Germany is expected to print -13.8. The US won’t release relevant macroeconomic data.

EUR/USD short-term technical outlook

Heading into the Asian opening, the EUR/USD pair is hovering around 1.1080, bearish according to the 4-hour chart. The pair attempted an intraday recovery but met sellers on an approach to the daily ascendant trend line broken last Friday. In the mentioned time frame, the price is well below all of its moving averages, with the 20 SMA crossing below the 200 SMA. Technical indicators, in the meantime, reached oversold readings, where they lost bearish strength. The main support comes at 1.1065, with a break below it exposing the 1.0980 level, where the pair bottomed by the end of November.

Support levels: 1.1065 1.1020 1.0980

Resistance levels: 1.1140 1.1180 1.1220

View Live Chart for the 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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