EUR/USD Forecast: 1.1100 aligns as next bearish target

EUR/USD trades in a tight range above 1.1100 on Friday.
The near-term technical outlook suggests that sellers retain control.
The pair could have a difficult time finding direction ahead of the weekend.

Eren Sengezer FXStreet

EUR/USD fluctuates in a narrow channel above 1.1100 on Friday after renewed bearish pressure on Thursday made it break below 1.1200. The pair's near-term technical outlook shows that the bearish bias remains intact, but investors could refrain from taking large positions ahead of next week's key macroeconomic events.

First-time applications for unemployment benefits in the US declined to 228,000 in the week ending July 15, data from the US Department of Labor showed Thursday. With the reading highlighting tight labor market conditions, 10-year US Treasury bond yield rose sharply and the US Dollar (USD) outperformed its rivals in the American session.

Early Friday, US stock index futures trade modestly higher on the day. A positive opening in Wall Street's could make it difficult for the USD to preserve its strength.

Nevertheless, there won't be any high-tier data releases from the US, so EUR/USD's action could remain subdued regardless of the changes in risk perception.

Next week, the Federal Reserve (Fed) and the European Central Bank (ECB) will announce monetary policy decisions.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays well below 50, while holding above 30, suggesting that EUR/USD has more room on the downside before turning technically oversold.

On the downside, 1.1100 (Fibonacci 38.2% retracement of the latest uptrend) aligns as first support before 1.1050 (100-period Simple Moving Average (SMA), Fibonacci 50% retracement) and 1.1000 (psychological level, Fibonacci 61.8% retracement).

In case the pair rises above 1.1160 (Fibonacci 23.6% retracement), additional gains toward 1.1180 (50-period SMA) and 1.1200 (psychological level, static level, 50-period SMA) could be seen.

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Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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