The euro has been declining for two weeks in a row. All this time, analysts have been waiting for an upward reversal. However, it did not occur despite high expectations. At the same time, the US dollar is highly overbought.
On Friday, the euro also did not recover when many market participants were betting on it. The euro got stuck in the narrow range. The fact is that after the opening of the US session, the EU revised its GDP outlook for the fourth quarter.
According to flash estimates, the indicator was expected to slow down to 2.8% from 3.9%. Now, it is projected to accelerate to 4.2%. In case of a decline in GDP figures, the euro/dollar pair is likely to keep falling.
However, if the reading is upbeat, it may trigger a rise in the euro. Economists believe that this increase will be short-lived as economic expansion in the euro area is not so robust as in the US.
After a strong downward movement, the euro/dollar pair entered the narrow range below the support zone of 1.1160/1.1180. It may indicate a change in the trend, resulting in a correction.
The RSI technical indicator rose above the 30 line on the 4H chart, signaling a slowdown in the downward movement. The Alligator indicator shows a downward signal judging by the direction of the moving averages on the 4H and daily charts.
On the daily chart, there is a prolongation of the downtrend that originated in June 2021. It pushed the price back to the level of June 2020. Thus, the current price stagnation or correction is unlikely to affect the overall trend significantly.
Outlook
The corrective movement of the pair will be confirmed if the price consolidates above 1.1180. If so, it will open the way to the levels of 1.1210 - 1.1260. If this scenario does not come true, the pair will likely trade in the narrow range of 1.1120/1.1180.
The complex indicator analysis signals open long positions on short-term and intraday charts amid the price reversal. Technical indicators signal short positions in the medium term because of a downtrend.
