EUR/USD Price Forecast: Sellers gain confidence ahead of first-tier events

EUR/USD Current price: 1.0528

• Market players tuned cautious ahead of US inflation, Bank of Canada decision.
• The European Central Bank will likely trim interest rates by 25 bps this Thursday.
• EUR/USD turned lower and could extend its near-term slide.

The EUR/USD pair is under mild selling pressure on Tuesday, trading around the 1.0520 region. The US Dollar found demand amid increased caution ahead of first-tier events. With the macroeconomic calendar offering nothing to worry about, investors focus on the upcoming United States (US) Consumer Price Index (CPI) and the Bank of Canada (BoC) monetary policy announcement on Wednesday. The BoC will open the central banks’ two-week agenda, which will end next Thursday, December 19, with the decision of the Bank of England (BoE).

More relevant, the European Central Bank (ECB) will announce its decision on monetary policy this Thursday. The ECB is widely anticipated to trim interest rates by 25 basis points (bps) each. President Christine Lagarde is expected to maintain the focus on balancing their monetary policy decisions with the Eurozone’s recent turmoil. Political woes in Germany and France are likely to take their toll on the central bank’s decision, as beyond their goal to keep inflation at check, policymakers are closely watching economic developments.

As per US CPI, market players anticipate the index will increase by 2.7% year-on-year (YoY) in November and rose 0.2% from the previous month. The core annual figure is foreseen at 3.3%, matching the October reading.

The EU did not release relevant data, while the US will offer some minor figures with Wall Street’s opening, leaving majors at the mercy of sentiment. The US will publish the November NFIB Business Optimism Index, Q3 Nonfarm Productivity, and Unit Labor Costs for the same quarter.

EUR/USD short-term technical outlook

From a technical perspective, the EUR/USD pair is bearish. The daily chart shows it is currently developing below a bearish 20 Simple Moving Average (SMA) after briefly developing above it. The 100 and 200 SMAs, in the meantime, gain downward traction far above the current level, which is in line with the long-term bearish perspective. Finally, technical indicators offer neutral-to-bearish stances while developing below their midlines, reflecting the decline but falling short of confirming a steeper decline.

In the near term, and according to the 4-hour chart, the bearish case is clearer. EUR/USD met sellers around a directionless 20 SMA, while is currently falling below a flat 100 SMA. At the same time, technical indicators gain downward momentum within negative levels, favoring a lower low in the upcoming session.

Support levels: 1.0500 1.0465 1.0420

Resistance levels: 1.0560 1.0625 1.0660