EUR/USD Forecast: Short-term Bearish Bias Remains, Likely To Break Below 1.17 Handle

The EUR/USD pair turned lower during the Asian session on Monday, weighed down by the possible implications of the disputed referendum on Catalonia independence in Spain. Meanwhile, the market seems to have digested Friday's mixed US economic data showing consumer spending barely rose in August, which was largely negated by better-than-expected Chicago PMI for September and mostly in-line consumer sentiment index. Hence, growing prospects for additional Fed rate hike action in December underpinned the US Dollar and further collaborated to the pair's slide at the start of a new month/quarter.

Today's economic docket features the release of final Eurozone PMI print and the US ISM manufacturing PMI, which would now be looked upon for some short-term trading impetus. Against the backdrop of latest political developments in the Eurozone and persistent greenback buying interest, the pair seems vulnerable to extend its near-term corrective slide.

Technically, the pair's modest recovery move from over one-month lows, touched last week, stalled just ahead of 50-day SMA support turned resistance. Adding to this, the pair's inability to sustain above the 1.1800 handle and reemergence of selling pressure at higher level clearly points to extension of the near-term corrective slide.

From current levels, immediate support is pegged near 1.1720 area, below which the pair is likely to break below the 1.1700 handle and test the1.1680-75 support area marking 23.6% Fibonacci retracement level of the 1.0341-1.2092 up-move. With short-term technical indicators still far from being in near-term oversold conditions, the fall could further get extended to the 1.1600 neighborhood.

On the flip side, the 1.1800-1.1810 zone might continue to act as the immediate supply zone. Even if the pair is able to move beyond the mentioned hurdle, any further up-move might now be capped at 50-day SMA barrier near the 1.1845-50 region.