EUR/USD Forecast: turning bearish in near term, ZEW surveys eyed

After yesterday's good two-way moves, the EUR/USD pair came under some fresh selling pressure during the Asian session on Tuesday and extended last week's retracement slide from fresh three-year tops. A follow-through US Dollar recovery, further supported by rising US Treasury bond yields, was seen as one of the key factors weighing on the major. 

Although trading with a mild negative bias just below the 1.2400 handle, the pair has managed to hold within Monday's narrow range. Traders now look forward to the German/composite Euro-area ZEW Economic Sentiment Survey for some fresh impetus. Also in focus would be on German political development, where SPD members begin voting on whether to enter another grand coalition under Chancellor Angela Merkel. The 463,723 party members of the SPD have until March 2 to submit their votes, and the result is expected to be announced soon thereafter.

In the meantime, the key focus would on the upcoming monetary policy meeting minutes from the FOMC and the ECB, due on Wednesday and Thursday, which should help determine the pair's near-term trajectory. 

Technically, the pair remains within a broader trading range but seems to have formed a bearish 'double-top' chart pattern, near the key 1.2500 psychological mark, on daily charts, which would be completed once the pair weakens below an important horizontal support near the 1.2200 handle. Hence, it would be prudent to wait for a decisive break below the mentioned support before confirming a near-term bearish reversal. 

Meanwhile, the short-term technical picture also points to some additional near-term bearish pressure, which could drag the pair towards 1.2335-30 area ahead of the 1.2300 handle. Below the mentioned levels, the downfall could further get extended towards 1.2240 horizontal zone en-route the important 1.2210-2200 support. 

On the flip side, any meaningful recovery attempt is likely to confront fresh supply near the 1.2430-35 region, above which the pair is likely to make a fresh attempt towards conquering the key 1.2500 psychological mark. Only a convincing breakthrough the 1.25 handle would negate the bearish pattern and would thus, point to a resumption of the prior appreciating move.