EUR/USD Forecast: Bearish Pressure To Aggravate Below 1.1830

The EUR/USD pair held near four-week lows touched in reaction to a surprisingly weak election result for Angela Merkel at the German general election. The shared currency took an additional knock following an unexpected drop in the German IFO business climate index for September and ECB President Mario Draghi's comments that the outlook for inflation in the Eurozone remains uncertain in wake of the recent volatility in exchange rates.

The pair on Monday broke through a short-term ascending trend-channel support but has just managed to hold a 4-week old trading range support near the 1.1835-30 region. The escalating war of words between North Korea and the US kept a lid on the US Dollar's strong overnight up-move, and extended some support to the major pair, at least for the time being.

Investors focus now shifts to the Fed Chair Janet Yellen's scheduled speech in Cleveland, later during the NY trading session. With the Fed's near-term monetary policy outlook still an ultimate decider for the greenback's near-term trajectory, Yellen's comments would be closely scrutinized for hints about a possible December rate hike move.

Heading into today's key event, the US economic docket, featuring the release of Conference Board's Consumer Confidence Index for September and New Home Sales data, would be looked upon for some short-term trading impetus.

From a technical perspective, traders are likely to wait for a follow-through selling pressure below the 1.1835-30 strong horizontal support in order to confirm a bearish breakdown. Below the mentioned support, the pair is likely to break below the 1.1800 handle and head towards testing its next support near 1.1760-55 area before eventually dropping to 1.1720 horizontal level.

Meanwhile, on the upside, any recovery attempts might now confront fresh supply at the ascending trend-channel support break-point, now turned resistance, near the 1.1900 handle. Any subsequent recovery should now be capped near 1.1935-40 supply zone.