EUR/USD Forecast: Break through 1.0700 on the table

EUR/USD Current price: 1.0734

• The US Dollar pared its rally as the market sentiment marginally improved.
• European data was mixed but did not impact the Euro, still trading on sentiment.
• EUR/USD trades near its January low and is poised to break below it.

The  EUR/USD pair bottomed for January at 1.0723 on Monday and trades nearby as the new day develops. The US Dollar retains its strength across the FX board, although the momentum eased alongside government bond yields’ run. Financial markets are still digesting global rate cut delays, which won’t come as soon as expected. Early in Asia, the Reserve Bank of Australia (RBA) announced its monetary policy announcement, leaving rates unchanged as widely anticipated. However, local policymakers joined the cautious train and said additional hikes could not be ruled out.

Asian stocks traded mixed, with Chinese indexes backed by governmental intervention. Still, the mood seems to have improved in Europe, as local shares hold on to modest gains, underpinning Wall Street ahead of the opening. Currently, the 10-year Treasury note offers 4.16%, unchanged from Monday’s close.

On the data front, Germany reported that Factory Orders were up 8.9% MoM in December, beating the market expectations. On the contrary, the Eurozone informed Retail Sales fell 1.1% MoM in the same month, worse than anticipated. The upcoming American session will bring nothing of interest, although a few Federal Reserve (Fed) speakers will be on the wires and may introduce some noise.

EUR/USD short-term technical outlook

The EUR/USD pair trades near its monthly low, and the daily chart shows there’s room for another leg south. The pair develops below all its moving averages, with the 20 Simple Moving Average (SMA) maintaining its bearish strength above directionless longer ones. Technical indicators, however, resumed their slides within negative levels, still far from oversold readings.

In the near term, and according to the 4-hour chart, the risk also skews to the downside. The Momentum indicator heads firmly lower, well below its 100 level, while the Relative Strength Index (RSI) indicator hovers around 33 without directional strength. Finally, moving averages maintain their bearish slopes, with the 20 SMA providing dynamic resistance around 1.0795.

Support levels: 1.0695 1.0650 1.0610

Resistance levels: 1.0760 1.0795 1.0840