EUR/USD Forecast: Risk-off to kick start the week, EUR to keep advancing

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1094

A US yield-curve inversion amid a continued run to safety is hurting the greenback.
The final versions of January manufacturing PMI to be out this Monday.
EUR/USD near a critical Fibonacci resistance level at 1.1105, bullish.

The EUR/USD pair neared the 1.1100 figure late Friday, on persistent dollar’s weakness. Risk-off was the main theme, with Wall Street plummeting and soaring demand for safe-haven assets included Treasury bonds. The yield-curve began shrinking, reviving concerns of a US recession and hurting demand for the greenback. Fed´s Vice Chairman Richard Clarida said that he was not worried about it and argued that it was a product of global uncertainty rather than the US outlook when asked about the issue, but the market ignored his word.

Meanwhile, weekend news indicated that the coronavirus outbreak continued expanding, with more cases reported outside China and more deadly cases in the Country. Furthermore, a bird flu outbreak, which is considered much deadlier than coronavirus, has been reported in Hunan province, not far from the epicenter of coronavirus. No human cases have been reported, yet the headline will likely add to the ongoing dismal mood.

In the macroeconomic front, Markit will release this Monday the final versions of its January Manufacturing PMI, foreseen unchanged in the Union, and the US. This last will also release the more relevant official ISM Manufacturing PMI, seen in January at 48.5, up from the previous 47.2.

EUR/USD short-term technical outlook

The EUR/USD pair is a few pips below the 61.8% retracement of its 1.1173/1.0991 decline at 1.1103, the immediate resistance. In the daily chart, the advance is falling short of signaling a bullish continuation as the pair stalled its recovery around a bearish 20 DMA, while technical indicators bounced sharply from oversold levels, but remain within negative levels. In the shorter term, and according to the 4-hour chart, the risk is skewed to the upside, as technical indicators head north almost vertically in overbought levels, while the price surpassed its 20 and 100 SMA.

Support levels: 1.1060 1.1020 1.0980

Resistance levels: 1.1105 1.1145 1.1190

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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