EUR/USD Forecast: Sellers taking over, break through 1.0700 at sight

Valeria Bednarik FXStreet

EUR/USD Current price: 1.0721

ECB policymaker Klass Knot hinted at more rate cuts before year end.
Dismal United States data limits US Dollar strength ahead of Wall Street’s opening.
The EUR/USD pair is in retreat mode after failing to overcome the 1.0750 price zone.

After failing to extend gains beyond the 1.0750 region, the EUR/USD pair eased on Thursday, falling to an intraday low of 1.0712 posted during European trading hours. Nevertheless, financial markets seem to be in a good mood, limiting US Dollar strength. Asian and European indexes trade in the green, underpinning Wall Street ahead of the opening.

Meanwhile, European Central Bank (ECB) policymaker Klaas Knot hit the wires and said that the “just under three” cuts priced in by financial markets for 2024 were “broadly in line” with the optimal policy path as priced into ECB projections. He then added that there's a strong case for the ECB to decide quarterly based on the outlook.

Data-wise, the Eurozone did not release relevant macroeconomic data, while the United States (US) published multiple figures ahead of the session opening. Initial Jobless Claims for the week ended June 14 were up by 238K, worse than the 235K expected. At the same time, Building Permits fell by 3.8% MoM in May, while Housing Starts declined by 5.5%. Finally, the Philadelphia Fed Manufacturing Survey printed at 1.3 in June, down from the previous 4.5 and worse than the 5 anticipated. Later in the session, the European Commission will release the preliminary estimate of the June Consumer Confidence index.

EUR/USD short-term technical outlook

From a technical point of view, EUR/USD has room to extend its slide. The daily chart shows that the pair is trading near its intraday low and below all its moving averages, with the 20 Simple Moving Average (SMA) about to extend its slide below the flat 100 and 200 SMAs. At the same time, technical indicators gain downward momentum within negative levels, reflecting increased selling interest.

In the near term, EUR/USD is neutral-to-bearish. The 100 SMA has crossed below the 200 SMA, maintaining its bearish slope, while the pair is currently developing below a flat 20 SMA. Technical indicators, in the meantime, tick marginally higher, although within negative levels. The pair would need to run past 1.0760 to confirm a bullish continuation, an unlikely scenario at this point.

Support levels: 1.0710 1.0665 1.0620

Resistance levels: 1.0760 1.0810 1.0840

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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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