EUR/USD Forecast – Euro Lower as Dollar Strengthens Ahead of Powell Speech

The Euro is trading lower at the mid-session on Tuesday as the U.S. Dollar rose ahead of a key speech by Fed Chair Jerome Powell at 17:00 GMT.

The speech from Powell at the Economic Club of Washington will give the Fed Chief an opportunity for Powell to offer more clarity on where rates are headed, or clarify some comments made after last week’s 25 basis point rate hike.

The markets interpreted a slew of his disinflation comments during last week’s post-meeting press conference as dovish, prompting the single currency to surge to a 10-month high. However, these investors were caught on the wrong side of the market on Friday after stronger-than-expected economic data triggered a surge in Treasury yields and the U.S. Dollar.

At 16:25 GMT, the EUR/USD is trading 1.0696, down 0.0031 or -0.29%. The Invesco CurrencyShares Euro Trust ETF (FXE) is at $98.67, down $0.32 or -0.32%.

In economic news, Euro Zone consumer expectations for inflation edged up again in December, a European Central Bank survey showed on Tuesday, indicating that recent interest rate hikes and falling energy prices have not yet tempered price growth fears.

In other news, German industrial production fell more than expected in December, driven by a plunge in output from energy-intensive sectors, the federal statistics office said on Tuesday.

Daily EUR/USD Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.0483 will reaffirm the downtrend. A move through 1.1033 will change the main trend to up.

The nearest support is a 50% level at 1.0661. The closest resistance is at 1.0758.

The major support is a long-term 50% level at 1.0381. The major resistance is a long-term 50% level at 1.0943.

Daily EUR/USD Technical Forecast

Trader reaction to the 50% level at 1.0661 is likely to determine the direction of the EUR/USD into the close on Tuesday.

Bullish Scenario

A sustained move over 1.0661 will indicate the presence of buyers. This could trigger a surge into 1.0758. Overtaking this level will indicate the buying is getting stronger with 1.0851 the next likely target.

Bearish Scenario

A sustained move under 1.0661 will signal the presence of sellers. This is a potential trigger point for an acceleration to the downside with 1.0483 the next major downside target.