EUR/USD Forecast: Traders on the side-lines ahead of critical first-tier events

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0641

Eurozone Investor Confidence plunged in March, while February Retail Sales barely rose in February.
Speculative interest awaits US Federal Reserve Chair Jerome Powell’s testimony before Congress.
EUR/USD is technically neutral and has limited bullish potential in the near term.

The EUR/USD pair hovers around 1.0640 on Monday, easing from an intraday peak of 1.0656. The US Dollar started the week on a weak tone, easing against its major rivals amid the better market mood from last week. The Greenback recovered just modestly ahead of the American open, helped against the Euro by soft European data.

The Eurozone published March Sentix Investor Confidence, which fell to -11.1 from -8 in February, also missing the expected -8.6. Additionally, February Retail sales in the EU increased a modest 0.3% MoM but fell 2.3% on a yearly basis. The United States will publish January Factory Orders, with nothing else relevant in the docket for today.

Nevertheless, multiple first-tier events will follow through, starting with Federal Reserve (Fed) Chairman Jerome Powell’s testimony before Congress. Powell will testify on Tuesday and Wednesday before different Committees, and his words will be closely followed by market players.

Powell acknowledged that the disinflationary process had already started in the latest central bank meeting, but macroeconomic figures released afterwards suggest price pressures are still a big headache for policymakers. His pre-prepared remarks will be out after Wall Street’s close on Monday, but the focus will be on the Q&A and any hints Powell could give on the future of monetary policy.

Also, several central banks will announce their monetary policy decisions this week, including the Reserve Bank of Australia, the Bank of Canada and the Bank of Japan. Finally on Friday, the United States will publish the February Nonfarm Payrolls report.

EUR/USD short-term technical outlook

The EUR/USD pair is confined to a tight intraday range ahead of a directional catalyst. The pair is technically neutral, according to the daily chart, with a limited bullish potential. EUR/USD is meeting sellers around its 20 Simple Moving Average (SMA), which is losing its bearish strength but remains above the current level at around 1.0660. The 100 SMA, in the meantime, advances below the current level and nears 1.0515, the 50% Fibonacci retracement of the 2022 yearly slump. Finally, technical indicators have turned flat just below their midlines, reflecting the absence of directional strength.

The 4-hour chart offers a similar technical picture. The pair is trading between a mildly bullish 20 SMA and a bearish 100 SMA, while the 200 SMA keeps heading south far above the current level. Meanwhile, the Momentum indicator turned marginally higher but is stuck around its 100 line, failing to provide directional clues. The Relative Strength Index (RSI) indicator seesaws around 55, but stands below its intraday high, reflecting limited buying interest. Bulls could have better chances if EUR/USD regains 1.0700, although a major resistance level is located at 1.0745, the 61.8% retracement of the aforementioned yearly decline.

Support levels: 1.0610 1.0560 1.0515

Resistance levels: 1.0660 1.0700 1.0745

View Live Chart for the EUR/USD

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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