EUR/USD Forecast: Unconvinced bulls give up even before starting

EUR/USD Current Price: 1.0520

• The US Federal Reserve will announce its monetary policy decision on Wednesday.
• The American dollar retains its overall strength despite an improved market mood.
• EUR/USD failed attempt to extend gains towards 1.0600 increases the chances of lower lows.

The EUR/USD pair found some temporal demand on Tuesday, surging early in the US session to a daily high of 1.577. The greenback recovered ahead of Wall Street’s close, helped by upbeat US data, with the pair currently trading in the 1.0520 price zone.

Market players have temporarily put aside growth-related concerns and shifted their focus to central banks’ announcements. The Reserve Bank of Australia disclosed its decision to hike rates by 25 bps early on Tuesday, more than the general agreement of 15 bps. The US Federal Reserve and the Bank of England will have monetary policy meetings later in the week, and both are expected to be more aggressive and hike by 50 bps.

Ahead of the first-tier events, the EU released the March Producer Price Index, which jumped to 36.8% YoY from 31.5% in the previous month, indicating that price pressures are far from over. The US released March Factory Orders, which were up 2.2% MoM, and JOLTS Job Openings for the same month, up to 11.549 million.

The macroeconomic calendar will include on Wednesday the final readings of the S&P Global Services PMIs for the EU and the US, while the Union will publish March Retail Sales. The US will release the April ADP survey on private job creation and the official ISM Services PMI ahead of the US central bank announcement. The Fed is not only expected to hike rates, but speculative interest is also awaiting details on how policymakers plan to reduce the massive balance sheet.

EUR/USD short-term technical outlook

The EUR/USD pair maintains its bearish bias according to the daily chart, as it continues consolidating at the lower end of its latest range. In the mentioned time frame, the moving averages head firmly lower, far above the current level, with the 20 SMA providing dynamic resistance at around 1.0750.

The 4-hour chart suggests that the bullish potential remains limited. The pair failed to extend gains beyond a flat 20 SMA and now hovers around it. Technical indicators have lost their early momentum and are now stuck around their midlines, below their early highs. Overall, bears retain control, with the pair looking to break below the year’s low at 1.0470, en route to 1.0339, a multi-year low posted in January 2017.

Support levels: 1.0505 1.0470 1.0420

Resistance levels: 1.0595 1.0630 1.0680

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