EUR/USD pierces 1.06, finds lowest bids in a year

• EUR/USD trimmed further into the low end on Tuesday.
• Fiber lost a third of a percent as the pair chalks in a third straight losing day.
• US CPI inflation figures loom ahead on Wednesday.

EUR/USD trimmed further into low the side on Tuesday, shedding another third of a percent. Fiber briefly tested below 1.0600 during the day's market session, and the pair is poised for further losses after a rapid seven-week decline from multi-month highs set just above 1.1200 in September.

A lack of meaningful EU-centric economic data has left Greenback flows front and center of the Fiber chart, though Euro traders will be looking ahead to Thursday's pan-EU Gross Domestic Product (GDP) update. The EU's third quarter GDP is expected to confirm the preliminary print of 0.4% QoQ, and the annualized figure is forecast to show that Europe grew by an unremarkable 0.9% YoY.

US CPI inflation figures for the month of October are slated to release on Wednesday, and markets are expecting a rebound in annualized headline consumer price growth. Full-fat CPI inflation is forecast to tick higher to 2.6% YoY compared to September's print of 2.4%. Core CPI inflation is expected to hold steady at 3.3% YoY. The monthly figure for both inflation categories are broadly expected to hold flat month-on-month.

EUR/USD price forecast

The EUR/USD daily chart shows a clear bearish trend, with the pair trading well below the 50-day EMA (1.0895) and the 200-day EMA (1.0888). The downward momentum has accelerated after EUR/USD broke below these moving averages, both of which are now acting as resistance levels. The alignment of the shorter-term EMA below the longer-term EMA further signals that the bears are firmly in control, confirming a downtrend in the near term.

Adding to the bearish bias, the MACD indicator is showing strong downward momentum. The MACD line is below the signal line, with both moving deeper into negative territory. The histogram has expanded significantly on the downside, indicating that bearish momentum remains robust. This setup on the MACD suggests that sellers are currently dominant and that buyers have yet to step in with sufficient strength to reverse the downward trend. Without a bullish crossover or a reduction in the histogram's size, the bearish trend is likely to persist.

In terms of support levels, EUR/USD is approaching the psychological level of 1.0600, which could offer some relief to the downside pressure. If this support level fails to hold, the pair may target the 1.0500 level, where further buying interest might emerge. For the bulls to regain control, a break back above the 200-day EMA is essential, but given the current technical structure, such a recovery seems unlikely in the short term. As it stands, the bearish outlook remains intact, with downside risks prevailing in the near term.

EUR/USD daily chart