EUR/USD Forecast: Uncertainty Remains The Main Theme

• US Retail Sales soared in May, while Fed’s chief Powell cooled down corporate bond-buying expectations.
• The number of new coronavirus cases in the US rising at an alarming pace, Beijing also reported a new peak.
• EUR/USD retreated from highs, with increased bearish potential in the short-term.

It was quite a busy day in the news front this Tuesday, with ups and downs in sentiment. Nevertheless, the greenback got to gain against most major rivals, with EUR/USD ending the day in the 1.1260 price zone after hitting a daily high of 1.1353. The shared currency found support during European trading hours in an upbeat German ZEW Survey showed that Economic Sentiment improved in June, as the German index came in at 63.4 while for the whole EU, it resulted in 58.6. Inflation in the country met the market’s expectations.

Meanwhile, global indexes were on the rise amid news that the Federal Reserve will include corporate bond-buying, later boosted by US Retail Sales, up by 17.7%, largely surpassing the market’s expectations. Also, equities were underpinned by news that a commonly used steroid seems to be having a positive effect to fight COVID-19.

Optimism faded as the number of coronavirus cases soared in some US states, and Beijing reported a “serious” expansion of the virus, while US Fed chief Powell said that corporate bond-buying probably won't be aggressive and is more of a contingency plan, within his testimony before Congress. Equities trimmed gains, backing dollar’s gains in the US afternoon. This Wednesday, the EU will release it’s May inflation figures, with annual inflation seen at 1.6%. The US will publish housing-related data, while the Fed will testify again before Congress.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair continues to trade around the 23.6% retracement of its latest daily advance at 1.1270, turning bearish in the short-term. The 4-hour chart shows that the pair was unable to hold above a bearish 20 SMA, currently around the 1.1300 level, while technical indicators turned south, entering negative territory. The pair held above Friday’s low at 1.1212, which continues to limit the downside. Below it, 1.1170, the 38.2% retracement of the mentioned rally, provides a more relevant support level.

• Support levels: 1.1215 1.1170 1.1120
• Resistance levels: 1.1310 1.1350 1.1390