EUR/USD Forecast: US Dollar aims to extend gains

EUR/USD Current price: 1.0858

• Financial markets are cautiously optimistic ahead of big names earning reports.
• United States' upcoming first-tier data exacerbates the cautious stance.
• EUR/USD poised to extend its slide, near-term support at 1.0820.

The US Dollar keeps grinding higher on Tuesday, resulting in EUR/USD falling to a fresh two-week low in the 1.0850 price zone. The Greenback benefits from a cautious mood ahead of earnings reports. Multiple S&P500 big names will report results this week, and investors eagerly await the outcome before compromising with a particular position. Stock markets trade mixed ahead of Wall Street’s opening, yet overall, it seems markets retain a certain dose of optimism after current United States (US) President Joe Biden stepped down from the presidential race. The news boosted the USD amid hopes Donald Trump could win and apply more market-friendly measures.

Meanwhile, European Central Bank (ECB) Vice President Luis de Guindos hit the wires. De Guindos said that while the level of uncertainty is “huge,” inflation is “practically” in line with policymakers’ projections. Furthermore, he added that September would be a much more convenient month for making decisions as officials will have more data.

The macroeconomic calendar remains scarce, with first-tier US figures scheduled for later in the week, exacerbating the quietness. The country will release the first estimate of the Q2 Gross Domestic Product (GDP) and fresh Personal Consumption Expenditures (PCE) Price Index data.

After the US opening, the Eurozone will publish the preliminary estimate of July Consumer Confidence, while the US will release June Existing Home Sales and the Richmond Fed Manufacturing Index for July.

EUR/USD short-term technical outlook

From a technical point of view, the EUR/USD pair is at risk of extending its slide. The pair keeps trading above all its moving averages, but technical indicators maintain their firmly downward slopes, approaching their midlines from above. Regarding moving averages, the 20 Simple Moving Average (SMA) advances above directionless 100 and 200 SMAs, but with its bullish strength moderating, suggesting buyers are not sure of adding on dips.

In the near term, and according to the 4-hour chart, the risk skews to the downside. Technical indicators resumed their slides after failing to regain positive levels, heading sharply lower below their midlines. At the same time, a bearish 20 SMA provides intraday resistance in the 1.0870 price zone, while EUR/USD approaches a bullish 100 SMA, acting as dynamic support at around 1.0820. Once below the latter, the bearish case will likely gain strength.

Support levels: 1.0820 1.0770 1.0725

Resistance levels: 1.0870 1.0910 1.0945