EUR/USD Forecast: Poised To Challenge 1.1670 Support, Focus Shifts To Draghi's Speech

On Tuesday, the EUR/USD pair remained under some selling pressure for the fourth consecutive session and dropped to a 6-day low level of 1.1736. The shared currency was initially weighed down by weaker German ZEW economic sentiment. The selling pressure was aggravated during the New York trading session following the release of better-than-expected import-prices, industrial production, and capacity utilization data from the US, provided an additional boost to the already stronger US Dollar.

Moreover, speculation that President Donald Trump was leaning towards nominating a Fed Chair who would be more inclined to raise interest rates at a faster pace, remained supportive of the prevailing bullish sentiment around the greenback.

The pair managed to bounce off lows but held below the 1.1800 handle as investors turn their focus to ECB President Mario Draghi's scheduled speech at the ECB conference. Draghi's comments should be closely scrutinized to see if the central bank will decide to prolong the stimulus program at its Oct. 26 meeting, which should eventually drive the shared currency in the near-term.

Later during the early North American session, speeches by influential FOMC members - New York Fed President William Dudley and Dallas Fed President Robert Kaplan, along with the US housing market data - housing starts and building permits, should also be looked upon for some short-term trading impetus.

With short-term technical indicators holding in negative territory, the pair remains poised to head towards testing the 1.1700 mark. Weakness below the mentioned handle might continue to find strong support near the 1.1675-70 horizontal zone, which if broken would confirm a fresh bearish breakdown and turn the pair vulnerable to extend its near-term slide down.

On the upside, any recovery attempts might now confront fresh supply near the 1.1800 handle. Even if the pair manages to clear this immediate barrier, any further up-move should now be capped at a short-term descending trend-line resistance, currently near the 1.1830 region, also coinciding with 38.2% Fibonacci retracement level of 1.2092-1.1669 recent slide.