EUR/USD Weekly Forecast: Dollar can Easily Resume its Upward Rally

EUR/USD Weekly Forecast: Dollar can Easily Resume its Upward Rally

● Policymakers boost optimism despite a certain dose of caution.

● US employment-related data would take centre stage next week.

● EUR/USD recovered some ground, but the risk remains skewed to the downside.

After sharply appreciating following the US Federal Reserve announcement, the greenback corrected lower this past week. The EUR/USD pair recovered from a two-month low of 1.1846, to settle at the 1.1960 price zone, falling short of losing its bearish potential.

EUR/USD technical outlook

The EUR/USD pair posted a modest weekly advance, ending it a handful of pips above the 61.8% retracement of the March/May rally at around 1.1920. The 50% retracement of the same rally comes at 1.1985, the immediate resistance, and the level to beat to give hope to bulls.

From a technical point of view, the risk remains skewed to the downside in the long term. The weekly chart shows that the pair keeps developing below its 20 SMA, which slowly gains bearish traction. Moreover, longer moving averages are losing their bullish strength but remain far below the current level. Meanwhile, technical indicators have turned modestly higher, but the Momentum remains stuck at neutral levels, while the RSI currently stands at 47, indicating limited buying interest.

The daily chart shows that bears are still in the drivers seat. The pair is developing below all of its moving averages, with the 20 SMA accelerating south above the longer ones. The closest MA is the 200 one, currently at around 1.1990. Technical indicators have corrected the extreme oversold reading witnessed in the previous week but are currently resuming their declines within negative levels, in line with further dollar gains.

The June low at 1.1848 is the immediate support level, followed by the 1.1770 price zone. If the pair falls below this last one, the slump will quickly extend toward the 1.1700 mark. Beyond the mentioned 1.1985 Fibonacci level, the pair could recover up to the 1.2060/70 price zone.

EUR/USD sentiment poll

According to the FXStreet Forecast Poll, the pair has limited upward scope. The weekly perspective show that bears remain a majority, with the pair seen on average around 1.1900. Selling interest decreases in the monthly and quarterly perspectives, although bulls stand at 41% and 50% respectively. In both cases, the pair is seen on average, a handful of pips above the 1.2000 figure.

In the Overview chart, moving averages have pared their slides and turned higher, but the shorter one remains below the current level, while the longer ones had a limited bullish potential. In the one-month time-frame, most targets accumulate around the 1.2000 level, while in the quarterly view, the 1.2200 price zone is the one attracting the most interest.