EUR/USD Price Forecast: A Return to $1.025 to Bring $1.030 into Play

For the EUR, it is a quiet day ahead on the Eurozone economic calendar. There are no economic indicators from the Eurozone for the markets to consider.

On Monday, German business sentiment numbers highlighted the downside risks to the Eurozone economy. In July, the Ifo Business Climate Index slid from 92.2 to a two-year low of 88.6.

Following the ECB rate hike on Thursday and forward guidance, a sharp decline in business sentiment questioned the ECB’s outlook on monetary policy.

From the weekend, ECB policymaker hawk, Robert Holzmann, said that the ECB would consider the Eurozone economy at the September meeting.

Weak economic indicators would limit the size of any hike, with Holzmann noting that forecasts are pointing to weaker growth. However, Holzmann did not write off another 50-basis point hike.

For the day ahead, risk sentiment will likely provide direction ahead of US economic indicators later in the day.

EUR/USD Price Action

At the time of writing, the EUR was up 0.06% to $1.02243.

A mixed morning saw the EUR rise to an early high of $1.02501 before falling to a low of $1.02082

Technical Indicators

The EUR/USD needs to avoid the $1.0218 pivot to target the Monday high of $1.02578 and the First Major Resistance Level (R1) at $1.0258.

With no economic indicators to consider, a pickup in demand for riskier assets would support a return to $1.025.

An extended rally would likely see the EUR/USD pair test the Second Major Resistance Level (R2) at $1.0297 and resistance at $1.0300 before any pullback.

The Third Major Resistance Level (R3) sits at $1.0377.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0178 into play.

An extended sell-off throughout the day would likely see the EUR/USD test the second Major Support Level (S2) at $1.0139.

The Third Major Support Level sits at $1.0060.

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal.

At the time of writing, the EUR sat above the 100-day EMA, currently at $1.02194.

The 50-day EMA narrowed to the 100-day EMA, while the 100-day EMA was flat against the 200-day EMA, which were positive price signals.

A breakout from the 100-day EMA would support a run at R1 to bring R2 and the 200-day EMA, currently at $1.03182, into play.

However, a pullback from the 100-day EMA would bring the 50-day EMA, currently at $1.01886, and S1 into play.

The US Session

After a quiet start to the week, the focus shifts to consumer confidence. Ahead of Thursday’s GDP numbers, fears of a US recession are mounting. Weak numbers will test support for riskier assets and likely pressure the EUR/USD pair.

Away from the economic calendar, US corporate earnings will also draw interest as the markets gear up for the Fed policy decision on Wednesday.