EUR/USD Forecast: Remains vulnerable to test sub-1.1300 level, Euro-zone macro data eyed

The currency crisis in Turkey remained a dominant theme at the start of a new trading week and the effect was felt across global financial markets. As investors assessed European banks' exposure to Turkey, the EUR/USD pair opened with a bearish weekly gap and fell to a 13-month low level of 1.1365, albeit managed to find some minor support at lower levels. 

A rumoured news that American pastor Andrew Brunson will be released from house arrest by August 15 was seen as one of the key factors providing a minor lift to the major. The uptick, however, lacked any strong follow-through after the US Embassy in Turkey quickly came out and denied the rumours. 

Adding to this, resurgent US Treasury bond yields limited any meaningful US Dollar profit-taking slide and further collaborated towards keeping a lid on any meaningful up-move. The pair now seems to have entered a bearish consolidation phase as market participants now look forward to the release of prelim Q2 GDP growth figures and German ZEW Economic Sentiment for some fresh impetus.

From a technical perspective, last week’s bearish break below a descending triangle and the pair’s inability to register any meaningful recovery, despite near-term oversold conditions, clearly seems to suggest that the near-term bearish bias might still be far from over. Hence, any subsequent recovery beyond the 1.1430-35 region (overnight swing high), though could get extended, is likely to remain capped at the triangle support break-point, now turned resistance, near the key 1.1500 psychological mark.

On the flip side, the downside could get extended towards July 2017 monthly lows, around the 1.1315-10 region, before the pair eventually breaks below the 1.1300 handle and heads towards testing its next support near the 1.1285-80 region.