EUR/USD Forecast: Pressure mounts ahead of first-tier events

EUR/USD Current price: 1.0758

• Market participants await a US inflation update and central banks’ announcements.
• Stock markets trade mixed, limiting demand for the US Dollar.
• EUR/USD aims south in a quiet start to the week, support at 1.0720.

The EUR/USD pair trades uneventfully within familiar levels on Monday as caution reigns ahead of critical first-tier events. Investors await the US Consumer Price Index (CPI) release on Tuesday, with the United States (US) Federal Reserve (Fed) and the European Central Bank (ECB) announcing their monetary policy decisions later in the week. Market participants believe easing inflationary pressures and tepid growth will result in policymakers deciding to maintain interest rates on hold at their last 2023 meetings.

The US Dollar is marginally up at the beginning of the week, helped by an uptick in government bond yields, although gains are limited. In the meantime, stock markets trade mixed, with most indexes holding into the green and preventing safe-haven assets from rallying further.

Finally, an empty macroeconomic calendar exacerbates range trading ahead of Wall Street’s opening.

EUR/USD short-term technical outlook

The EUR/USD pair hovers around the 38.2% Fibonacci retracement of the 1.1275/1.0447 slump at 1.0761, with the risk skewed to the downside. The daily chart shows the pair is developing below its 20 and 200 Simple Moving Averages (SMAs), while the 100 SMA converges with the mentioned Fibonacci level while maintaining a bearish slope. Technical indicators, in the meantime, remain near their recent lows within negative levels, although lacking directional strength.

EUR/USD is bearish, according to technical readings in the 4-hour chart. The pair met intraday sellers at 1.0778, where a bearish 20 SMA converges with a flat 200 SMA. The Momentum indicator turned marginally lower at around its 100 level, while the Relative Strength Index (RSI) indicator aims lower at around 36, favoring a downward continuation. Friday’s low at 1.0723 provides near-term support en route to the next Fibonacci support at 1.0645.

Support levels: 1.0725 1.0680 1.0645

Resistance levels: 1.0810 1.0860 1.0900