EUR/USD Forecast: Pressure continues as investors become risk-averse

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0963

The US ADP Employment Change survey showed 324K new job positions were added in July.
Fitch Ratings downgraded the US debt rating from AAA to AA+, spurring risk aversion.
EUR/USD en route to retesting the lower end of its latest range at 1.0833.

The EUR/USD pair could not recover the 1.1000 threshold, meeting strong selling interest on a peak beyond the mark. The pair currently trades in the 1.0960 price zone, under pressure for a third consecutive day, yet holding above last week’s low at 1.0943. Financial markets turned risk-averse ahead of critical United States (US) figures, with global indexes trading in the red and the US Dollar outperforming its major rivals.

The first half of the day was pretty quiet regarding macroeconomic data, although news that Fitch Ratings downgraded the US debt rating from AAA to AA+ on Tuesday amid the debt ceiling turmoil undermined the mood. Ahead of Wall Street’s opening, however, the US published the ADP Employment Change survey, which showed that the private sector added 324K new job positions in July, beating the 189K expected. The news gave an additional boost to the Greenback ahead of the Nonfarm Payrolls report (NFP) to be out next Friday.

EUR/USD short-term technical outlook

The EUR/USD pair holds below the 61.8% Fibonacci retracement of the latest bullish run between 1.0833 and 1.1275 at around 1.1000, favoring a full retracement to the bottom of the range in the upcoming sessions. Technical indicators in the daily chart offer solid bearish slopes well below their midlines, also supporting a downward extension. Finally, the pair is falling further below its 20 Simple Moving Average (SMA), another indication of bears’ strength.

The 4-hour chart shows that the pair remains below all its moving averages, with the 20 SMA now developing below the 100 and 200 SMAs, although lacking directional strength. At the same time, the Momentum indicator grinds south below its 100 line, while the Relative Strength Index (RSI) indicator heads sharply lower at around 38, all of which skews the risk to the downside.

Support levels: 1.0945 1.0910 1.0870

Resistance levels: 1.1005 1.1065 1.1105

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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