EUR/USD Forecast: US Dollar surges as caution returns ahead of first-tier events
EUR/USD Current Price: 1.0572
- Upbeat German data fell short of supporting the EUR as the sentiment worsens.
- United States Treasury yields advance ahead of first-tier events scheduled for Thursday.
- EUR/USD gains downward traction and points for a slide towards 1.0500.
The EUR/USD pair extended its slide on Wednesday, bottoming during London trading hours at 1.0565. Financial markets turned cautious after mixed earnings reports from big tech names and ahead of first-tier events on Thursday. Nevertheless, most global indexes trade in the green, limiting US Dollar gains.
The Euro came under selling pressure despite upbeat German data. The October IFO report showed the Business Climate improved to 86.9, beating expectations of 85.9. The assessment of the current situation also improved, to 89.2 from the previous 88.7, while Expectations increased to 84.7. The United States (US) macroeconomic calendar has nothing relevant to offer. The country published MBA Mortgage Applications, which declined 1% in the week ended October 20. Later in the session, the US will release September New Home Sales, while the Bank of Canada (BoC) will announce its monetary policy decision, introducing some noise in financial markets.
Meanwhile, US Treasury yields ticked higher ahead of critical events. Investors await the European Central Bank (ECB) monetary policy decision on Thursday, which will be announced alongside the US Gross Domestic Product (GDP). The preliminary estimate of the Q3 GDP is foreseen at 4.2%, much better than the previous 2.1%.
EUR/USD short-term technical outlook
From a technical point of view, the EUR/USD pair is at risk of extending its slide. In the daily chart, the pair is barely holding above a mildly bullish 20 Simple Moving Average (SMA), providing dynamic support at 1.0560. At the same time, technical indicators extended their slides, and the Momentum indicator is about to cross its 100 level into negative territory, while the Relative Strength Index (RSI) indicator stands at around 46, in line with increased bearish pressure.
In the near term, and according to the 4-hour chart, the risk skews to the downside. EUR/USD met sellers around a mildly bearish 200 SMA, while the 20 SMA has lost its bullish strength above the longer one. Finally, technical indicators head south with uneven strength but still supporting a downward extension in the upcoming session.
Support levels: 1.0560 1.0520 1.0480
Resistance levels: 1.0640 1.0685 1.0720
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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.
