EUR/USD Forecast: Euro turns south after failing to clear key resistance

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  • EUR/USD came under bearish pressure and declined toward 1.0800 early Wednesday.
  • Cautious market mood could make it difficult for the pair to rebound.
  • US economic calendar will feature second estimate of Q4 GDP growth.

After failing to clear 1.0860 resistance on Tuesday, EUR/USD turned south and declined toward 1.0800 early Wednesday. The pair’s technical outlook points to a bearish tilt in the near term. Market participants will pay close attention to the risk perception and the revision to the US growth data.

The broad-based US Dollar (USD) weakness helped EUR/USD push higher in the first half of the day on Tuesday. The mixed action in Wall Street’s main indexes and the resilience of the US Treasury bond yields, however, helped the currency hold its ground and didn’t allow the pair to gather bullish momentum.

The risk-averse market atmosphere, as reflected by retreating US stock index futures, supports the USD midweek and weighs on EUR/USD.

Euro price today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the US Dollar.

USD   0.22% 0.24% 0.24% 0.59% 0.17% 1.10% 0.20%
EUR -0.21%   0.03% 0.02% 0.39% -0.05% 0.88% -0.01%
GBP -0.24% -0.03%   0.00% 0.37% -0.07% 0.87% -0.03%
CAD -0.24% -0.04% 0.00%   0.36% -0.07% 0.86% -0.02%
AUD -0.61% -0.39% -0.37% -0.36%   -0.44% 0.50% -0.40%
JPY -0.17% 0.03% 0.06% 0.07% 0.41%   0.91% 0.04%
NZD -1.11% -0.90% -0.87% -0.87% -0.50% -0.94%   -0.91%
CHF -0.21% 0.01% 0.03% 0.03% 0.37% -0.03% 0.89%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Later in the day, the US Bureau of Economic Analysis (BEA) will release the second estimate of the annualized Gross Domestic Product (GDP) growth for the fourth quarter. In the initial estimate, the BEA reported that the US economy expanded by 3.3%. In case there is a significant downward revision, the immediate reaction could hurt the USD. If the GDP expansion is left unchanged as expected, or revised higher, EUR/USD could struggle to gain traction, with the USD staying resilient against its rivals.

Other data releases from the US will include preliminary Goods Trade Balance and Wholesale Inventories for January.

During the American trading hours, Atlanta Federal Reserve (Fed) President Raphael Bostic, New York Fed President John Williams and Boston Fed President Susan Collins will be delivering speeches. The CME FedWatch Tool shows that markets are pricing in a nearly 85% probability that the Fed will leave the policy rate unchanged in March and May. The market positioning suggests that the USD doesn’t have a lot of room left on the upside, even if Fed policymakers note that a rate reduction is unlikely until the second half of the year.

EUR/USD Technical Analysis

EUR/USD was last seen trading near 1.0820, where the 200-period Simple Moving Average (SMA) on the 4-hour chart is located. In case the pair starts using that level as resistance, next supports could be seen at 1.0800-1.0790 (psychological level, Fibonacci 23.6% retracement of the latest downtrend, 100-period SMA) and 1.0760 (static level).

If EUR/USD manages to stabilize above 1.0820, 1.0840 (broken ascending trend line) could act as interim resistance before 1.0860 (Fibonacci 38.2% retracement) and 1.0900-1.0910 (psychological level, Fibonacci 50% retracement).D