EUR/USD Forecast: Poised to break lower

EUR/USD Current Price: 1.1809

• Equities fall on risk-aversion providing support to the greenback.
• Poor US and German data are fueling the negative sentiment.
• EUR/USD may accelerate its decline on a break below 1.1770.

Resurgent coronavirus cases weigh on the market’s mood this Monday, with EUR/USD under pressure, trading around 1.1810. The greenback, however, has limited bullish strength, as continued political noised in the US limits demand for the dollar. Investors are still waiting to hear about real progress in stimulus talks, while the presidential election looms.

European equities trade in the red, led by the German DAX which losses roughly 2.5%. The IFO survey showed that the Business Climate in the country contracted to 92.7 in October from 93.2, missing expectations. The assessment of the current situation surged to 90.3, but expectations over the future also fell coming in at 95.

Wall Street is set to open in the red, further weighed by poor US data. The September Chicago Fed National Activity Index fell from 1.11 in August to 0.27. The country will publish September New Home sales and the October Dallas Fed Manufacturing Business Index in the upcoming session.

EUR/USD short-term technical outlook

The EUR/USD pair is at risk of falling further, according to intraday technical readings. The 4-hour chart shows that the pair is developing below a mildly bearish 20 SMA, although above the 100 and 200 SMA. Technical indicators, in the meantime, have limited directional strength, but hold within negative territory. The pair has an immediate support level at 1.1770, the level to break to put the pair in the bearish path.

Support levels: 1.1770 1.1725 1.1680

Resistance levels: 1.1870 1.1915 1.1950

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