EUR/USD Forecast: Dollar’s corrective advance too shy to change its negative trend

EUR/USD Current Price: 1.2127

  • German economic sentiment is expected to have contracted in December to -66.
  • The American currency is still the weakest across the FX board despite a modest recovery.
  • EUR/USD is bouncing from near 1.2100, in line with bulls’ dominance.

Major pairs are looking to stabilize after Monday’s swings, and EUR/USD holds within familiar levels above the 1.2100 figure. The dollar is correcting extreme oversold conditions but still among the weakest currency across the FX board, finding modest support in a sour market’s mood.

European equities opened with modest losses but hold around their opening levels, ahead of the release of the German ZEW survey. Economic Sentiment in the country is expected to have contracted further in December, to -66 from -64.3. For the EU, the sentiment is foreseen improving to 37.5 from 32.8. The Union will publish the final reading of Q3 GDP, expected to be confirmed at 12.6% QoQ. The US will publish today the November NIFB Business Optimism Index, and Q3 Nonfarm Productivity and Unit Labor Cost.

EUR/USD short-term technical outlook

The EUR/USD pair bounced from a daily low at 1.1209, trading at daily highs around 1.2130. The weekly low comes at 1.2078, and the bearish case will be firmer once below this last. In the near-term, and according to the 4-hour chart, the pair is neutral-to-bearish, as it’s developing just below a flat 20 SMA, while technical indicators lack directional strength, consolidating within neutral levels. The pair could recover its bullish stance once above the 1.2175 level, the immediate resistance.

Support levels: 1.2080 1.2035 1.1990

Resistance levels: 1.2175 1.2230 1.2280