EUR/USD Forecast: Selling pressure mounts, 1.0600 under siege

EUR/USD Current price: 1.0637

• The odds for a Federal Reserve rate cut in July declined below 50%.
• Encouraging German data provided near-term support to the Euro.
• EUR/USD recovered after flirting with 1.0600, bullish scope limited.

The EUR/USD pair extended its 2024 slide to 1.0601, its lowest since last November, but bounced back from the level during European trading hours. The US Dollar benefited from a sour market mood, the latter fueled by mounting tensions in the Middle East and reduced hopes for a soon-to-come Federal Reserve (Fed) rate cut.

After a war cabinet meeting, Israel is set to prepare a "forceful" response to Iran's massive aerial attack on Saturday. The decision goes against Western allies' recommendations to de-escalate the conflict. Meanwhile, solid United States (US) macroeconomic data pushes away the odds for a rate cut. Financial markets are losing hope that the central bank will act in July,  as the CME Group FedWatch Tool shows 51.3% odds of a no-change. The odds for a steady June decision currently stand at 79.1%

The EUR/USD pair advanced up to 1.0646 following the release of German data. The country released the March Wholesale Price Index, which rose 0.2% MoM, and the ZEW Survey on Economic Sentiment, which improved to 42.9 in April from 31.7 previously. Sentiment in the Eurozone was also better than anticipated, advancing from 33.5 in March to 43.9 in April. Finally, the German assessment of the Current Situation bounced modestly, printing at -79.2, following -80.5 in the previous month.

 Across the pond, the US released March Building Permits and Housing Starts, down 4.3% and  14.7%, respectively. Later in the day, the country will publish March Capacity Utilization and Industrial Production, while Fed Chairman Jerome Powell is due to participate in a fireside chat about economic trends in North America at the Wilson Center's Washington Forum.

EUR/USD short-term technical outlook

The EUR/USD pair extended gains following US data to 1.0651 but eased from the level. The daily chart offers a limited bullish potential. The latest advance seems corrective, as technical indicators barely bounce from oversold readings, lacking momentum enough to confirm an interim bottom. At the same time, EUR/USD develops below all its moving averages, with the 20 Simple Moving Average (SMA) extending its downward slope below the longer ones.

In the near term, and according to the 4-hour chart, the ongoing advance seems also corrective. EUR/USD pared gains below a firmly bearish 20 SMA, while the longer moving averages keep heading south far above the shorter one. Finally, the Momentum indicator advances within negative levels, but the Relative Strength Index (RSI) indicator consolidates around 33, suggesting absent buying interest.

Support levels: 1.0600 1.0570 1.0530

Resistance levels: 1.0665 1.0700 1.0745