EUR/USD Price Forecast: Unconvinced buyers could soon give up

EUR/USD Current price: 1.0463

• German elections’ result temporarily boosted the Euro, a conservative coalition in the makes.
• The Eurozone confirmed January annualised HICP at 2.7%, as expected.
• EUR/USD trimmed early gains and seems poised to extend its slide.

The EUR/USD pair surged at the weekly opening, trading as high as 1.0528 early in the European session, only to reverse gains and trade in the 1.0460 region ahead of Wall Street’s opening.

The Euro (EUR) rallied on the back of the outcome of the German elections, won by the Conservative Party. Friedrich Merz's conservatives, however, got roughly 28.5% of the votes, while the far-right Alternative for Germany Party came second with 20.8%. The news fueled hopes Germany’s economy would improve, underpinning the EUR, despite a coalition government yet to be formed.

Data-wise, Germany published the February IFO Business Climate survey, which came in at 85.2, below the 85.8 anticipated by market participants. January reading, in the meantime, was revised from 85.1 to 85.2. Expectations improved to 85.4 from the 84.3 posted in January, beating expectations, while the assessment of the current situation came down to 85 from the 86 previous. Additionally, the Eurozone (EU) confirmed the Harmonized Index of Consumer Prices (HICP) at 2.7% YoY in January, as previously estimated.

The United States (US) macroeconomic calendar will include the January Chicago Fed National Activity Index and a speech from President Donald Trump.

EUR/USD short-term technical outlook

From a technical point of view, the daily chart for the EUR/USD pair suggests lower lows ahead. The pair retreated sharply after nearing a firmly bearish 100 Simple Moving Average (SMA), providing dynamic resistance at around 1.0550. The 20 SMA, in the meantime, remains directionless at around 1.0400, reinforcing the psychological support level. Finally, technical indicators turned lower but remain above their midlines.

In the near term, and according to the 4-hour chart,  EUR/USD is currently pressuring a flat 20 SMA, while the 100 and 200 SMAs stand directionless, well below the current level. Additionally, technical indicators retreated sharply from their intraday highs but are losing downward momentum just above their midlines. A steeper decline seems likely on a slide below 1.0440, the immediate support area.

Support levels:  1.0440 1.0400 1.0360

Resistance levels: 1.0485 1.0520 1.0560