EUR/USD Forecast: Tepid buying not enough for a bullish breakout

EUR/USD Current price: 1.0727

• The German IFO Survey showed that the Business Climate unexpectedly fell in June.
• Financial markets focus on the FOMC meeting Minutes and PCE inflation figures.
• EUR/USD recovers from sub-1.0700, sellers await in the 1.0760 price zone.

The US Dollar is under mild selling pressure ahead of Wall Street’s opening, giving up modest intraday gains. EUR/USD trades around 1.0730, recovering from an intraday low of 1.0681. The soft tone of United States (US) indexes on Friday weighed on its Asian counterparts at the beginning of the week, underpinning the USD and reflecting market concerns. Generally speaking, the focus is on political jitters and inflation, with the focus on the US Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's (Fed) favourite inflation gauge to be released on Friday.

Other than that, the macroeconomic calendar will include the minutes of the Federal Open Market Committee (FOMC) meeting. The document will hardly impact financial markets after the latest announcement included fresh economic projections suggesting one or two possible rate cuts before year end.

The Euro advances despite tepid local data. Germany published the June IFO Business Climate survey, which unexpectedly fell to 88.6 from 89.3 in May, missing the expected 89.7. The assessment of the current situation and expectations sub-indexes also miss the market’s estimates. The US calendar will include the Dallas Fed Manufacturing Business Index for June and a speech from Fed official Mary Daly.

EUR/USD short-term technical outlook

From a technical point of view, EUR/USD recovery seems corrective. In the daily chart, the pair develops below all its moving averages, with a bearish 20 Simple Moving Average (SMA) crossing below directionless 100 and 200 SMAs, all of them in the 1.0780/90 price zone. Technical indicators, in the meantime, head marginally higher, moving away from oversold readings but still far below their midlines.

The near-term picture shows buyers adding pressure. The EUR/USD pair is above the 20 SMA, while the longer moving averages maintain their bearish slopes far above the current level. Finally, technical indicators aim higher around neutral levels, still struggling to overcome their midlines. The pair would need to surpass 1.0760 to confirm the positive momentum and extend gains towards the 1.0810 price zone.

Support levels: 1.0710 1.0665 1.0620

Resistance levels: 1.0760 1.0810 1.0840