EUR/USD Forecast: Oversold In The Near-Term, But More Slides Could Be Expected

EUR/USD Current Price: 1.1672

• The ECB hinted more easing coming in December, will “recalibrate” all available tools.
• US economy grew at a faster than expected pace in the three months to September.
• EUR/USD is oversold in the near-term, but more slides could be expected.

The shared currency remained under selling pressure, falling against its American rival to 1.1649, a fresh one-month low. A dismal mood led the way throughout the first half of the day, with Asian and European equities extending their slumps. Upbeat US data paused equities’ bleeding, but a dovish ECB fueled the sour sentiment. The US dollar was once again the daily winner, further supported by Initial Jobless Claims shrinking further in the week ended October 23 and the preliminary estimate of the Q3 Gross Domestic Product, which printed an annualized 33.1%, above the 31% expected.

The ECB left its monetary policy unchanged as widely expected, with the deposit rate unchanged at -0.5% and the main rate at 0.0%. President Christine Lagarde’s statement was quite dovish, as she hinted more easing coming in December when the central bank will present fresh forecasts. Lagarde said that the whole Government Council agreed on extending the easing program. She gave no details but added that all available tools would be “recalibrated,” to counter the negative economic effects of the pandemic.

This Friday, the focus will shift to Europe, as Germany and the EU will publish their preliminary estimates of Q3 GDP. The German economy is seen growing by 7.3%, while the EU GDP is seen expanding by 9.4% when compared to the previous quarter. Annual comparisons, however, are still seen in negative levels.  

EUR/USD Short-Term Technical Outlook

The EUR/USD pair is trading near the mentioned daily low, maintaining its bearish potential heading into the Asian opening. The 4-hour chart shows that the pair is developing below all of its moving averages, with the 20 SMA accelerating south and about to cross below the 200 SMA. The Momentum indicator consolidates losses while the RSI is barely correcting extreme oversold conditions, indicating prevalent selling interest. A break below 1.1640 will likely signal an extension sub-1.16 in the upcoming sessions.

Support levels: 1.1640 1.1600 1.1560

Resistance levels: 1.1685 1.1720 1.1770

View Live Chart for the EUR/USD

Image sourced from Pixabay