EUR/USD Forecast: Sellers eye 1.1270 as euro stays below key resistance

EUR/USD has managed to stage a rebound on Monday after falling to its lowest level in two weeks but ended up closing the day in the negative territory. The pair trades in a relatively narrow channel near 1.1300 early Tuesday and looks increasingly unlikely to shake off the bearish pressure.

The data from Germany showed on Tuesday that the IFO Business Climate and Expectations indexes improved modestly in January. On a negative note, the Current Assessment Index declined to 96.1 from 96.9 in December. 

Meanwhile, heightened geopolitical tensions amid the Russia-Ukraine conflict is forcing investors to stay away from risk-sensitive assets and helping the dollar outperform its major rivals. Additionally, market participants remain worried about the loss of momentum in global economic recovery. The US Dollar Index is sitting at its highest level in two weeks above 96.00 early Tuesday.

Later in the day, the Conference Board's Consumer Confidence Index will be the only data featured in the US economic docket. S&P Futures and Nasdaq Futures are down 1.35% and 2%, respectively, suggesting that another heavy sell-off in US stocks could allow the greenback to preserve its strength in the second half of the day.

Conference Board Consumer Confidence January Preview: Inflation is a shock to the system.

EUR/USD Technical Analysis

EUR/USD's recovery attempt met resistance at 1.1330, where the 200-period SMA on the four-hour chart meets the descending trend line coming from mid-January. As long as it stays below that level, sellers are likely to continue to dominate the pair's action. The near-term bearish outlook is confirmed by the Relative Strength Index (RSI) indicator, which fluctuates between 30 and 40.

On the downside, 1.1270 (static level) aligns as the next target ahead of 1.1250 (static level) and 1.1230 (static level).

In case EUR/USD rises above 1.1330 and starts using it as support, it could extend its rebound to 1.1350 (100-period SMA, the Fibonacci 61.8% retracement of the latest uptrend).