EUR/USD Forecast: Waiting for Powell to set the tone

EUR/USD Current price: 1.0815

• Federal Reserve Chairman Jerome Powell will testify on monetary policy before Congress.
• Stock markets paused ahead of Powell, the sentiment is mostly positive.
• The EUR/USD technical picture suggests a bearish leg once below 1.0790.

The EUR/USD pair consolidates within familiar levels, holding above the 1.0800 mark. The US Dollar suffers unevenly across the board amid the persistent risk-on mood. Wall Street closed mixed on Monday, with only the Dow Jones Industrial Average (DJIA) shedding some modest ground and the S&P500 reaching an all-time high amid strength in the tech sector. The positive sentiment extended in Asia, although European indexes trade in the red as caution takes over financial markets.

Investors await Federal Reserve (Fed) Chairman Jerome Powell's (Fed) testimony about the Semi-Annual Monetary Policy Report before the Senate Banking Committee in the hopes that Powell will provide clues on the timing of interest rate cuts. Other than that, the macroeconomic calendar has nothing relevant to offer during American trading hours.

EUR/USD short-term technical outlook

The EUR/USD pair is under mild selling pressure, posting modest intraday losses. Technical readings in the daily chart, however, indicate limited bearish potential as the pair continues developing above all its moving averages in the daily chart. The 100 and 200 Simple Moving Averages (SMAs) converge around 1.0790, providing near-term support. Meanwhile, the 20 SMA gains modest upward traction below it, which is not enough to confirm the return of buyers. Finally, technical indicators turned modestly lower within positive levels, reflecting the slide rather than anticipating another leg lower.

In the near term, and according to the 4-hour chart, the risk of a bearish extension has increased, although additional confirmations are needed. The current candle develops below a mildly bullish 20 SMA, showing selling interest leads. The 100 and 200 SMAs hold pretty much directionless below the current level, while technical indicators aim south at around their midlines. The downward momentum may increase on a break below 1.0790, with Powell’s dovish or hawkish lean setting the tone for the rest of the day.

Support levels: 1.0790 1.0740 1.0700  

Resistance levels: 1.0850 1.0880 1.0930