EUR/USD Price Forecast: Lower lows likely, with scope to test 1.1470

EUR/USD Current price: 1.1585

• Contradictory messages from US President Trump about China do not affect the market’s upbeat mood.
• Different Fed officials will do public appearances, but no comments on monetary policy are expected.
• EUR/USD nears October base in the 1.1540 area, with an increased bearish potential.

The EUR/USD pair extends its weekly slide on Wednesday, currently trading at around 1.1580. In the absence of relevant news, the US Dollar (USD) continues to benefit from increased hopes of de-escalating tensions between the United States (US) and China. At the same time, tepid European progress keeps the Euro (EUR) subdued.

US President Donald Trump kept delivering contradictory messages, saying he thinks he will have a very successful meeting with Chinese President Xi Jinping. However, he also stated: “Maybe it won’t happen. Things can happen where, for instance, maybe somebody will say, ‘I don’t want to meet, it’s too nasty.’ But it’s really not nasty, it’s just business.” Market players don’t seem to be concerned about Trump’s latest words.

Throughout the first half of the day, several European Central Bank (ECB) officials hit the wires, including President Christine Lagarde. However, none of them specifically referenced monetary policy, resulting in no price action. In the American afternoon, Federal Reserve (Fed) officials will be on the wires, yet given that they are in the blackout period prior to the Federal Open Market Committee (FOMC) monetary policy decision, no relevant comments are to be expected.

EUR/USD short-term technical outlook

The daily chart for the EUR/USD pair shows its trading in the red for a fourth consecutive day and pressuring fresh weekly lows. Technically speaking, the risk of a downward extension has increased, as the pair develops below its 20 and 100 Simple Moving Averages (SMAs), with the shorter one about to cross below the longer one, both now in the 1.1650 region. Other than that, technical indicators maintain their downward slopes within negative levels, favoring lower lows ahead.

The 4-hour chart shows that technical indicators lost their downward strength near oversold readings, but give no signs of downward exhaustion. At the same time, EUR/USD is developing below all its moving averages, with the 20 SMA gaining bearish strength below the longer ones, reflecting increased selling interest. The pair bounced sharply from the 1.1540 a couple of times in the last few weeks, making of the region a relevant support area. Once below it, the pair could extend its slide towards the 1.1470 region, a long-term static support area.

Support levels: 1.1540 1.1510 1.1470

Resistance levels: 1.1650 1.1690 1.1740