More fireworks ahead as inflation data looms
In this article, we’ll detail EURUSD Weekly Technical Forecast for July 11th – 15th. The EUR/USD pair plummeted to a 20-year low of 1.0071 on Friday to end the week at around 1.0170. Panic took over financial markets amid lingering recession fears and mounting inflationary pressures, spiced with an energy crisis in Europe, courtesy of Russia.
Investors moved into safety, and the dollar made the most out of it. Demand for US government bonds weighed on yields at the beginning of the week. Although the Treasury yield curve inverted, and hell broke loose. The yield on the 2-year note is higher than that on the 10-year note. This is usually seen by market participants as a hint of an upcoming economic setback.
EUR/USD technical outlook
The EUR/USD pair is trading at levels last seen in December 2002. The pair is oversold in the weekly chart, but the bearish momentum is strong. Technical indicators maintain their firmly bearish slopes within extreme levels, without signs of downward exhaustion. The 20 SMA stands over 600 pips above the current level, heading south almost vertically and far below the longer ones, reflecting sellers’ strength.
The daily charts hint at a potential bullish correction. Technical indicators have turned flat at extreme levels, while the current candle has a long downward wick, although it could also be attributed to profit-taking ahead of the weekend. Additionally, the EUR/USD pair remains far below bearish moving averages, which suggests that the bearish trend is firmly in place.
Further declines could be expected on renewed selling interest below 1.0100, with parity as the next bearish target. Below the latter, the slump could continue toward 0.9860, a major static support area.
Beyond 1.0200, on the other hand, chances are of a steeper corrective recovery that would meet initial resistance at 1.0335, followed later by the 1.0420 price zone.
EUR/USD sentiment poll
Our forecast poll shows that EUR bears are willing to keep pushing lower, as 67% of the polled experts are bearish in the near term, which means that, on average, the pair will target sub-1.0100 levels this week. However, a break below parity seems unlikely. Most poll participants are betting on a comeback in the monthly and quarterly perspectives, seen then returning to the 1.0400 price zone.
In the Overview chart, however, the bearish pressure hardly recedes. Most possible targets are located below the current level in the weekly and monthly views, although some strongly bullish bets distort the average. In the quarterly perspective, some participants see targets below 1, although most of them accumulate in the 1.02/1.06 price zone.
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