EUR/USD Forecast: Technically Bearish, Critical Static Support At 1.0980

EUR/USD Current Price: 1.1014

• Generally encouraging US data further underpinned the greenback.
• All eyes on the Fed’s decision and Chief Powell speech.
• EUR/USD technically bearish, critical static support at 1.0980.

The EUR/USD pair traded as low as 1.0997, ending Tuesday a few pips above the 1.1000 figure, as the dollar remained strong on the back of ruling cautious while getting an additional boost from local data. The US released December Durable Goods Orders, which rose by 2.4%, largely surpassing the 0.5% forecast. However, core readings were all in the red and worst than expected. The Non-defense Capital Goods Orders ex Aircraft fell by 0.9%, against a 0.% reading expected, partially overshadowing the positive headline.

Also, the CB Consumer Confidence Index increased in January to 131.6 following a moderate increase in December, “driven primarily by a more positive assessment of the current job market and increased optimism about future job prospects."  

This Wednesday, the US Federal Reserve will announce its latest decision on monetary policy. Powell Co. are widely anticipated to maintain the status quo, while the central bank won’t publish an update on economic forecast. The key will be Powell’s speech and any hint he offers on the future of rates and the balance sheet. Germany will release earlier in the day the February GFK Survey, seen at 9.6 in February, unchanged from January.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair is trading a few pips above the 1.1000 figure, maintaining its bearish tone. The 4-hour chart shows that it keeps developing below a firmly bearish 20 SMA, currently around 1.1030. The RSI indicator remains directionless at oversold readings, but the Momentum indicator recovers from its intraday lows, drawing a principle of divergence and suggesting the pair may correct higher before reaching lower lows. A break below 1.0980 will deny the possibility of correction and result in the pair approaching the 1.0900 figure.

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