EUR/USD Forecast: No relief for the shared currency

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0923

Fed´s Powell and ECB’s Lagarde were on the wires but failed to trigger some action.
Coronavirus concerns set temporarily aside, a vaccine may be ready in 18 months.
EUR/USD lower lows maintain the risk skewed to the downside.

The shared currency has been the weakest against the greenback, extending its decline to 1.0890, a fresh 2020 low. The slump came despite safe-haven assets, the dollar included, were off investors’ radar. The market’s sentiment improved on hopes the coronavirus outbreak might have already reached a peak. Nevertheless, the death toll has passed the 1,000 mark, while the WHO said a vaccine may be ready in 18 months, which means that market’s concerns about economic growth are meant to be with investors for long.

The macroeconomic calendar was scarce of relevant data, but Fed’s Chief Powell and ECB’s President Lagarde were on the wires. The first testified before the US Congress, and among other things, Powell said that forces that held down economic growth eased, bu added that risks to the US economy remain, particularly from the coronavirus. However, he noted that it is too early to asses the effect of the infection on the US economy. He also said that the current monetary policy will likely remain appropriate, but subject to reassessment. Regarding Mrs Lagarde, she spoke before the European Parliament's plenary session, but she referred to moderate growth and inflation below medium-term target, well-known facts.

This Wednesday, the EU will publish December Industrial Production, seen falling sharply, while, in the US, Fed’s Chief Powell will repeat his testimony before a different commission, with little chances of impressing speculative interest.

EUR/USD short-term technical outlook

The EUR/USD pair managed to recover some ground ending the day marginally higher just below a daily high of 1.0924. However, the pair posted a lower low and a lower high daily basis, which keeps the risk skewed to the downside. In the 4-hour chart, technical indicators have corrected extreme oversold conditions, but remain well into negative ground and losing strength upward, indicating that the pair may well resume its slide. Moving averages, in the meantime, retain their sharp bearish slopes above the current level. The pair will likely accelerate its decline on a break below 1.0878, 2019 yearly low.

Support levels: 1.0875 1.0840 1.0810

Resistance levels: 1.0920 1.0965 1.1000

View Live Chart for the EUR/USD

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.

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