EUR/USD Forecast: Bears need to take down the 1.0845 support

EUR/USD Current price: 1.0891

• The optimistic tone of global equities put a cap on US Dollar gains.
• Investors await central banks’ decisions and critical US data.
• EUR/USD trades within familiar levels, bears maintain the lead.

The EUR/USD pair trades uneventfully just below the 1.0900 mark on Monday, confined to a limited range. The absence of relevant macroeconomic news and first-tier events scheduled for later in the week keeps market participants cautious. Meanwhile, the positive tone of global equities limits demand for the US Dollar. Wall Street’s strength backs the modest optimism amid earnings beating expectations.

The focus these days will be on central banks, as the Bank of Japan (BoJ), the Bank of Canada (BoC), and the European Central Bank (ECB) will announce their monetary policy decisions. Additionally, the United States (US) will unveil the preliminary estimate of the Q4 Gross Domestic Product (GDP) and the December Core Personal Consumption Expenditures  (PCE) Price Index, the Federal Reserve’s (Fed) favorite inflation gauge. By the end of the week, the US Dollar could be on a much clearer trend after weeks of range trading.

The upcoming American session will bring the preliminary estimate of the Eurozone Consumer Price Index, foreseen in January at -14, improving modestly from the previous -15. The US will release the Richmond Fed Manufacturing Index for the same month, previously at -11.

EUR/USD short-term technical outlook

The EUR/USD pair is posting modest intraday gains and even reached a fresh four-day high of 1.0909. Still, technical readings in the daily chart fail to provide clear directional clues while suggesting the risk skews to the downside. The Momentum indicator advances but remains below its 100 level, while the Relative Strength Index (RSI) indicator consolidates around 45, reflecting limited buying interest. At the same time, the 20 Simple Moving Average (SMA) heads south well above the current level. Finally, a flat 200 SMA provides strong support at around 1.0845.

The 4-hour chart shows EUR/USD is neutral-to-bearish. The pair develops below the 100 and 200 SMAs, while a flat 20 SMA provides near-term support at 1.0880. Technical indicators, in the meantime, turned lower but are stuck around their midlines without enough strength to support another leg south. Selling pressure would increase on a break below the aforementioned 1.0845 level, where the pair met buyers multiple times in the previous week.

Support levels: 1.0880 1.0845 1.0800  

Resistance levels: 1.0935 1.0980 1.1010