EUR/USD Forecast: Bears on pause ahead of the ECB

EUR/USD Current Price: 1.0133
- Financial markets are in a better mood on Monday, putting pressure on the greenback.
- This week's focus will be on the European Central Bank monetary policy decision.
- EUR/USD trades with a positive tone in the near term, but the recovery is losing steam.
The EUR/USD pair extends its recovery on Monday, having traded as high as 1.0174 so far in the day. The dollar is under pressure amid a better market mood that pushes stocks up and narrows the US Treasury yield curve, which anyway remains inverted. The absence of relevant news helps market sentiment ahead of the European Central Bank monetary policy decision scheduled for next Thursday. The US Federal Reserve, on the other hand, entered a blackout period ahead of next week's announcement.
Nevertheless, concerns about a global recession are still pending like Damocles' sword. Major economies keep facing slow economic progress and rising inflation, the latter giving no signs of giving up. Most central banks have adopted aggressive tightening measures, except for the ECB, which has remained on hold until now. Quantitative tightening may help cool inflation but also weighs on economic progress, painting a gloomy global scenario.
The European macroeconomic calendar was empty, while the US will publish minor figures, including the July NAHB Housing Market Index and May TIC Flows.
EUR/USD short-term technical outlook
The EUR/USD pair holds on to gains, although it retreated from the mentioned high to trade in the 1.0130 price zone. The daily chart shows that the ongoing recovery may well be corrective, as technical indicators head north but well below their midlines, out of oversold territory. At the same time, the pair keeps developing well below bearish moving averages, with the 20 SMA maintaining its firmly bearish slope at around 1.0310.
In the near term, and according to the 4-hour chart, bulls seem to be losing steam. The pair remains above a mildly bullish 20 SMA, although the longer moving averages continue to head south far above the current level. Technical indicators, in the meantime, remain above their midlines but have lost their positive momentum. The pair could resume its decline, but bears will be more convinced if the pair breaks below 1.0070. Beyond 1.0185, on the other hand, the recovery can extend towards the 1.0260/70 price zone.
Support levels: 1.0070 1.0025 0.9960
Resistance levels: 1.0185 1.0220 1.0265
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Author

Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.


















