EUR/USD Forecast: Stuck in a familiar trading range, going nowhere in a hurry

The EUR/USD pair edged lower on the first day of a new trading week, albeit remained well within a familiar trading range held over the past one-week or so. As investors looked past Friday's dismal US jobs report, the US dollar was back in demand on the back of growing fears about the second wave of coronavirus infections and was seen as a key factor exerting some pressure on the major. Meanwhile, the latest optimism over the re-opening of the economies in some parts of the world fueled expectations that the global growth might have bottomed. This, in turn, lifted the US Treasury bond yields higher across the board, which remained supportive of the bid tone surrounding the USD.

The pair ended the day near the lower end of its daily trading range and remained depressed through the early Asian session on Tuesday. However, speculations that the Fed might be forced to push interest rates below zero held investors from placing aggressive USD bullish bets and helped limit deeper losses for the pair, at least for the time being. It is worth reporting that the Federal Reserve officials talked down the prospect of negative rates, though traders have been pricing in a small chance of such a move next year. The pair was last seen trading around the 1.0800 mark and remains at the mercy of the USD price dynamics amid empty Eurozone economic docket.

Later during the early North-American session, the release of the US consumer inflation figures might provide a fresh impetus. This along with scheduled speeches by influential FOMC members will influence the USD demand and assist traders to grab some meaningful opportunities. This comes ahead of the Fed Chair Jerome Powell's scheduled speech about the current economic issues on Wednesday, which might play a key role in driving the near-term sentiment surrounding the greenback and help determine the pair's next leg of a directional move.

Short-term technical outlook

From a technical perspective, the pair has been trading well below its important daily/intraday moving averages (50, 100 & 200-period SMA) and thus, seems vulnerable to slide further. However, the recent breakthrough a multi-week-old descending trend-line and the emergence of some dip-buying near the mentioned resistance-turned support favours bullish traders. The technical set-up points to an extension of the rangebound trading action and warrants some caution before placing any aggressive directional bets.

In the meantime, any meaningful slide below the 1.0800 round-figure mark might continue to find some support near the trend-line resistance breakpoint, currently near the 1.0740 area. That said, a convincing breakthrough might turn the pair vulnerable to break below the 1.0700 mark and head towards retesting YTD lows, around the 1.0635 region.

On the flip side, the 1.0840-50 region now seems to have emerged as an immediate resistance, above which the pair is likely to aim towards reclaiming the 1.0900 round-figure mark. Some follow-through buying might accelerate the momentum further towards the 1.0975 supply zone en-route the key 1.10 psychological mark and monthly tops, around the 1.1020 region. The latter coincides with the very important 200-day SMA and should now act as a key pivotal point for short-term traders.