EUR/USD Forecast: Risk sentiment fuels the dollar’s demand

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1813

Pandemic developments in the EU and politic turmoil in the US spurred risk aversion.
US September Durable Goods Orders foreseen at 0.7% from 0.5% in August.
EUR/USD is neutral-to-bearish in the near-term, could accelerate south once below 1.1770.

The EUR/USD pair fell this Monday to 1.1802, ending the day in the red in the 1.1810 price zone. The market’s mood was on the back foot, amid coronavirus developments in Europe, with several countries reporting a record number of new cases. Spain has established this Sunday the state of alarm for six months and imposed a national curfew. Italy has also announced curfews, already in place in France. The dismal sentiment was also supported by the lack of progress in a US stimulus aid package. US advisor Larry Kudlow said that talks slowed but not ended. At this point, chances of a deal before the election are null, and investors are taking note.

In the macroeconomic front, Germany published the October IFO survey, which 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. In the US, the September Chicago Fed National Activity Index fell from 1.11 in August to 0.27, while New Home Sales fell by 3.5% MoM. On Tuesday, the focus will be on US September Durable Goods Orders, seen up 0.7% from 0.5% in August.

EUR/USD short-term technical outlook

The dollar is up against most major rivals in a risk-averse environment, but the EUR/USD pair saw buyers defending the 1.1800 level. The pair is neutral-to-bearish in the near-term, as, in the 4-hour chart, it is developing below a mildly bearish 20 SMA, but above converging 100 and 200 SMA. Technical indicators, in the meantime, remain below their midlines, with modest downward slopes. Bears will have better chances on a break below 1.1770, a strong static support level.

Support levels: 1.1770 1.1725 1.1680

Resistance levels: 1.1870 1.1915 1.1950

View Live Chart for the EUR/USD

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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.

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