EUR/USD backslides on thin Monday volumes

• EUR/USD fell to a fresh 30-week low on Monday.
• US markets were thinned by a holiday, but the Greenback still rose.
• Fiber traders will get a breather before key data drops in the latter half of the week.

EUR/USD slid to a fresh 30-week low on Monday, kicking off the first trading session of the week with a 0.6% decline. Fiber extended losses below the 1.0700 handle as Euro bulls evaporate as markets await key US Consumer Price Index (CPI) inflation and a fresh update to pan-European Gross Domestic Product figures, both of which are slated to publish during the back half of the trading week.

The Euro has only a mid-tier smattering of economic data on the economic calendar for the early half of the week, leaving Fiber traders to chew on the US' upcoming CPI inflation print due on Wednesday. October's headline US CPI is expected to accelerate to 2.6% YoY from the previous period's 2.4%, with core CPI for the same period forecast to hold steady at 3.3% YoY. Thursday will follow up with US Producer Price Index (PPI) business-level inflation, which is also expected to tick higher to 2.9% YoY in October from 2.8%.

On the European side, hopeful Euro bulls will be looking for a hold (at best) in EU-wide GDP growth numbers slated for early Thursday. Quarterly EU GDP growth in the third quarter is forecast to hold steady at 0.4% QoQ, while annualized EU GDP growth is expected to hold steady at an unremarkable 0.9% YoY.

EUR/USD price forecast

The EUR/USD daily chart displays a strong bearish momentum, with the pair extending losses after a recent breakdown below the 200-day EMA at 1.0895. The price is now well below both the 50-day EMA at 1.0960 and the 200-day EMA, confirming the bearish trend in the short to medium term. This downward move signals that sellers are firmly in control, with the pair nearing the next support level around 1.0650. A sustained close below this support level could further accelerate the downside momentum.

The MACD indicator, situated below the chart, supports the bearish sentiment, as the MACD line is diverging from the signal line in the negative territory. The histogram has turned more negative, suggesting an increase in bearish momentum. However, it is worth noting that the MACD line remains relatively close to the signal line, indicating that momentum could still shift if buyers step in at key support levels. A bullish crossover on the MACD would be the first sign of a potential trend reversal, but as of now, such a signal remains absent.

In the near term, a break below the immediate support at 1.0650 could lead to further declines, potentially targeting the psychological level of 1.0600. Conversely, if EUR/USD finds buying interest around the current levels, it may retest the 1.0750-1.0800 resistance zone. However, with both the 50-day and 200-day EMAs trending lower, the path of least resistance appears to be to the downside. Traders will likely watch for any bullish signals to confirm a reversal, but the overall technical picture currently favors the bears.

EUR/USD daily chart