EUR/USD Forecast: Pressure mounts, about to challenge 1.0880 support

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0906

Sentiment turned sour as US President Trump escalated tensions with China.
Data coming from the US and the US continued to reflect the effects of COVID-19 on the economy.
EUR/USD pressures the 1.0900 threshold and poised to extend its decline.

Risk-off took over the financial world at the beginning of the week, with the greenback edging higher against most major rivals. The EUR/USD pair traded as low as 1.0895, ending the day just above this last. The dismal market mood was triggered by mounting tensions between the US and China, as US President Trump said that he has strong evidence that the coronavirus originated in a Wuhan lab. He also said that the Asian giant is not complying with the trade deal quotas, and menaced to terminate the phase one.

Data coming from Europe was mixed, as the final version of the German April Markit Manufacturing PMI was upwardly revised to 34.5, although the one for the whole Union came down to 33.5. Also, the EU Sentix Investor Confidence index plunged to -41.8 in May, much worse than the -33.5 anticipated. As for US data, the ISM-NY Business Conditions Index for April resulted at 4.3 from 12.9 previously, while March Factory Orders fell by 10.3%. This Tuesday, the EU Commission will release its growth forecast, and against the usual, it may impact the shared currency. The US will publish the April ISM Non-Manufacturing PMI, previously at 50.

EUR/USD short-term technical outlook

The EUR/USD pair is at risk of extending its decline, as, in the 4-hour chart, it settled below its 20 SMA for the first time in over a week. In the mentioned time-frame the 100 and 200 SMA converge directionless at around 1.0880, providing support, while technical indicators have turned flat around their midlines. Further declines are to be expected on a break below 1.0880, the immediate support.

Support levels: 1.0880 1.0830 1.0795

Resistance levels: 1.0920 1.0950 1.0995

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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