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EUR/USD Forecast: Repeated Failure To Recover Above 1.11 Lift Odds Of A Steeper Slide

Valeria Bednarik - Chief Analyst at FXStreet

EUR/USD Current Price: 1.1092

  • ZEW Survey surprised to the upside in January, provided intraday support to the EUR.
  • The American dollar recovered the market’s favor with Wall Street’s opening.
  • EUR/USD repeated failure to recover above 1.11 lift odds of a steeper slide.

The greenback started the day weakening against most major rivals, recovering ground, however, during the American afternoon as Wall Street returned from a long weekend. The EUR/USD pair peaked at 1.1117 ahead of the US opening, finding support in a better-than-expected January German ZEW Survey. According to it, the Economic Sentiment in the country improved to 26.7, much better than the  15 expected. The Current Situation for the country came in at -9.5, better than the -13.5 expected and the previous -19.9. For the EU, the survey shows that sentiment improved to25.6 largely surpassing the 5.5 forecast.  The EUR/USD pair is finishing the day little changed a few pips below the 1.1100 level.

The US macroeconomic calendar has provided no background to the greenback, as the country didn’t release relevant figures. This Wednesday, the country will release some minor reports that have little chances of moving the market. The US will publish the Chicago Fed National Activity Index, foreseen at -0.2 in January, and Existing Home Sales, expected to have risen by 1.2% in December.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair briefly traded above a daily ascendant trend line broken last week, but retreated from the are, suggesting that bears are willing to add at higher levels. In the 4-hour chart, the pair is developing below a bearish 20 SMA, which heads south below the larger ones, keeping the risk skewed to the downside. Technical indicators have lost upward momentum within negative levels, resuming their declines below their midlines, also indicating increased odds of a bearish extension.

Image by angelo luca iannaccone from Pixabay

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