EUR/USD Forecast: Looks to confirm a bearish breakdown ahead of Thursday's ECB decision

The EUR/USD pair ticked higher at the start of a new trading week though lacked any strong follow-through amid a rather mixed and quiet price action. Trading was a bit subdued on the back of a bank holiday in the US and absent relevant market moving economic releases. The initially climbed to the 1.1400 neighborhood and then erased a major part of the early modest gains to finally settle just a few pips above two-week lows, set on Friday. A modest US Dollar uptick, supported by some fresh safe-haven flows, turned out to be one of the key factors prompting some fresh selling at higher levels. 

Worries over global growth reemerged after the International Monetary Fund (IMF) lowered its global growth forecast for 2019 to the weakest in three years, citing a larger-than-expected slowdown in China and the Euro-zone. The downgrade came after China reported its slowest quarterly economic growth since 2009 and the weakest annual growth rate since 1990, and prompted investors to move into traditional safe-haven currencies. The greenback held steady near two-week tops through the Asian session on Tuesday and seemed rather unaffected by the partial US government shutdown/dovish Fed expectations.

Today's economic docket features the release of German ZEW economic sentiment for January but the key focus will remain on the latest ECB monetary policy update on Thursday. The European Central Bank is expected to turn a bit more dovish in wake of softer incoming economic data, which would make the shared currency less attractive and might trigger a fresh leg of the bearish slide in the near-term.

From a technical perspective, nothing seems to have changed for the pair, with bears still awaiting a decisive break through the 1.1350-40 confluence support - comprising of 23.6% Fibonacci retracement level of the 1.1815-1.1216 downfall and the lower end of a short-term ascending trend-channel formation on the daily chart. Below the mentioned support the pair is likely to extend the recent bearish trajectory and weaken further below the 1.1300 handle, towards retesting multi-month lows support around the 1.1215 region.

On the flip side, the 1.1400 handle now seems to have emerged as an immediate resistance, which if cleared might trigger a short-covering bounce towards 38.2% Fibonacci retracement level resistance, near the 1.1445-50 zone but seems more likely to remain capped near the 1.1470-75 region.