EUR/USD Forecast: On its way to piercing 0.9951
EUR/USD Current Price: 1.0002
- Germany could be hit by a recession and inflation peak above 10%, according to the Bundesbank.
- Market players are still pricing in the acceleration in the Fed balance sheet’s reduction.
- EUR/USD retains its bearish stance and could reach fresh multi-decade lows.
The EUR/USD pair battles around parity after dipping to 0.9988 at the beginning of the European session. Markets are in risk-off mode, with the greenback making the most out of it, also appreciating against safe-haven rivals.
The shared currency is further suffering from the Bundesbank monthly report, which noted that a recession in Germany is increasingly likely, and that could inflation will continue to accelerate and could peak at more than 10%. Meanwhile, market players are still digesting the FOMC Meeting Minutes and pricing in the upcoming acceleration in the central bank’s balance sheet reduction.
The macroeconomic calendar has nothing more to offer this Monday after the US published the Chicago Fed National Activity Index, which improved to 0.27 in July from -0.25 in the previous month. The news had a limited impact on financial markets. Ahead of the US opening, Wall Street is poised to open dip in the red, while government bond yields hold on to their latest range, as the yield on the 10-year Treasury note flirts with 3%.
EUR/USD short-term technical outlook
The EUR/USD pair approaches its over two-decade low set last July at 0.9951. Technical readings favor a continued decline as the pair is further below a now bearish 20 SMA, which develops well below the longer ones. Technical indicators, in the meantime, maintain their bearish slopes within negative levels without signs of downward exhaustion.
In the near term, and according to the 4-hour chart, the risk is also skewed to the downside, although technical indicators stand in extreme oversold territory. Nevertheless, the RSI indicator maintains its downward slope while the Momentum is stable, hinting at persistent selling interest. In the same time frame, the 20 SMA heads firmly south below the longer ones.
The pair is heading towards the aforementioned multi-year low and could even pierce it in the upcoming sessions. Bears will hold the grip as long as the pair remains below 1.0105.
Support levels: 0.9985 0.9950 0.9910
Resistance levels: 1.0050 1.0105 1.0160
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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.
