EUR/USD Price Forecast: Bears return as risk sentiment deteriorates

EUR/USD Current price: 1.0498

• Most European HCOB Manufacturing PMIs suffered downward revisions in November.
• The United States will release the November ISM Manufacturing PMI.
• EUR/USD turned bearish in the near term, aims to test the 1.0420 price zone.

The EUR/USD pair is under mild selling pressure at the beginning of a new week, easing from an intraday peak of 1.0569 and piercing the 1.0500 level ahead of Wall Street’s opening. The Euro was hit by political turmoil in France, as far-right leader Marine Le Pen said she could bring down France’s minority government by the end of the year unless changes are made to the country’s budget bill. Markets turned risk-averse with the headlines, with stocks under pressure and yields rallying.

Also, tensions between Russia and United States (US) president-elect Donald Trump undermine the mood. Trump threatened to impose tariffs on BRICS countries, triggering a quick response from the Kremlin, stating any attempt to force the US Dollar use will backfire.

Data-wise, the Hamburg Commercial Bank (HCOB) published the final versions of the November Manufacturing Purchasing Managers Index (PMI) for major European economies. Most figures suffered downward revisions, with the final EU Manufacturing PMI, anyway confirmed at 45.2. S&P Global will release the US Manufacturing PMI in the American session, while ISM will release the official November Manufacturing PMI, foreseen at 47.5, slightly better than the previous 46.5.

EUR/USD short-term technical outlook

From a technical point of view, the EUR/USD pair is at risk of falling. In the daily chart, technical indicators turned south after paring their advances within negative levels, reflecting prevalent selling interest. At the same time, the 20 Simple Moving Average (SMA) accelerated south, providing dynamic resistance at around Friday’s intraday high at 1.0596. Finally, the 100 and 200 SMAs hold far above the shorter one, slowly grinding south, in line with the dominant bearish trend.

The near-term picture is bearish. The 4-hour chart shows that the pair develops below all its moving averages, although a bearish 100 SMA is about to cross below a flat 20 SMA suggesting limited downward momentum, partially due to the long Thanksgiving weekend. Technical indicators, in the meantime, are neutral-to-bearish within negative levels. A break through the 1.0465 level should open the door for a steeper slide, aiming initially towards the 1.0420 region en route to the year low at 1.0332.

Support levels: 1.0465 1.0420 1.0370

Resistance levels: 1.0540 1.0585 1.0625