EUR/USD Forecast: Poised To Extend The Bearish Slide To Sub-1.1700 Level

The German election setback continued weighing on the shared currency for the second straight session on Tuesday and dragged the EUR/USD pair below the 1.1800 handle to over one-month lows. Also collaborating to the pair's bearish break below a 4-week old trading range was broad-based US Dollar strength, which got an additional boost after the Fed Chair Janet Yellen reinforced market expectations for another rate hike move in 2017.

The US economic data released on Tuesday showed new home sales fell short of consensus estimates and came in at 560K for August. Meanwhile, the Conference Board’s Consumer Confidence Index ticked lower to 119.8 during September, down from previous month's reading of 120.4, but did little to dent prevalent bullish sentiment surrounding the buck.

Meanwhile, renewed optimism over the US President Donald Trump's tax reform plan was also seen underpinning the greenback and increasing the odds for an additional corrective slide for the major.

The pair languished near one-month lows through the Asian session on Wednesday as investors now look forward to the key release of US durable goods data later during the early North American session.

From a technical perspective, the pair has confirmed a bearish breakdown and with short-term indicators gradually drifting into bearish territory, it remains poised to extend near-term downward trajectory. From current levels, immediate support is pegged near 1.1720 level, below which the pair is likely to drop below the 1.1700 handle and test its next support near the 1.1680 region, marking 23.6% Fibonacci retracement level of YTD up-move.

Conversely, any recovery attempts back above the 1.18 mark might now confront fresh supply around the short-term trading range break-points, turned strong resistance, near the 1.1830-35 region. Any subsequent up-move could get extended, but now seems more likely to be capped near the 1.1900 handle.