EUR/USD Forecast: Sellers maintain the pressure ahead of US PCE inflation

EUR/USD Current price: 1.0789

• European Central Bank policymakers kept hinting at a rate cut coming next June.
• United States core PCE inflation foreseen steady at 2.8% YoY in February.
• EUR/USD settled below the 1.0800 mark, heading into the long weekend with a bearish tone.

The EUR/USD pair broke below the 1.0800 threshold on Thursday, reaching a fresh March low of 1.0774 during European trading hours. The pair bounced from such a low but retained its negative tone and settled in the 1.0790 price zone. The US Dollar benefited from hawkish Federal Reserve (Fed) comments, as Governor Chris Waller confirmed the central bank is in no rush to trim rates.

The Euro, on the other hand, suffered from tepid local data, as Germany reported Retail Sales fell 2.7% YoY in February, much worse than the 0.8% slide anticipated. Comments from European Central Bank (ECB) Board member Fabio Panetta passed unnoticed. Panetta repeated that the risks to price stability in the Euro Zone are diminishing, materializing the conditions for starting to ease monetary policy. Several ECB officials have hinted at a rate cut in June, aligned with President Christine Lagarde.

 The US Dollar shed some ground ahead of Wall Street’s opening as upbeat US data spurred risk appetite. The final estimate of the Q4 Gross Domestic Product (GDP) was upwardly revised to 3.4% from the previous 3.2% estimate. Additionally, the country released Initial Jobless Claims for the week ended March 22, which came in better than anticipated at 210K. Finally, the March Michigan Consumer Sentiment Index was upwardly revised to 79.4, much better than the preliminary estimate of 76.5, while Pending Home Sales were up 1.6% MoM in February, beating expectations.

Most markets will remain closed on Friday due to the Easter Holiday, although the US will publish the core Personal Consumption Expenditures (PCE) Price Index, the Fed’s favorite inflation figure, expected to remain stable at 2.8% Year over Year.

EUR/USD short-term technical outlook

The EUR/USD pair is currently developing below the 61.8% Fibonacci retracement of the 1.0694/1.0981 rally at 1.0803, which skews the risk to the downside. The daily chart for EUR/USD shows the pair remains below all its moving averages, with a flat 200 Simple Moving Average (SMA) converging with the next Fibonacci resistance level at 1.0835. Finally, technical indicators extended their slides within negative levels, maintaining their downward slopes and anticipating lower lows ahead.

In the near term, the 4-hour chart also supports a bearish extension, as EUR/USD keeps developing below all its moving averages while meeting sellers around a bearish 20 SMA. Meanwhile, the longer moving averages remain directionless above the shorter one. Lastly, technical indicators resumed their declines within negative levels, reflecting increased selling interest.

  Support levels: 1.0770 1.0725 1.0690

Resistance levels: 1.0800 1.0835 1.0870