EUR/USD Forecast: New lows to end the week? Delta doom, failure to recapture 1.17 point down

• EUR/USD has failed to recover from the Federal Reserve's blow.
• Growing worries about the Delta covid variant will likely trigger more safe-haven flows to the dollar. 
• Friday's four-hour chart is painting a bearish picture.

Is this all the correction? That is the question for EUR/USD bulls on Friday, as a downbeat week is drawing to a close. The "dead-cat bounce" pattern has been characterizing the pair's movements for long months, and the current failure to recapture 1.17 is yet another example. The dollar's breather is limited and short-lived. 

What is behind the downfall? The dollar remains in the driver's seat and for two main reasons. First, the greenback continues benefiting from the green light that the Federal Reserve seems to have given to announcing tapering of its bond-buying scheme in its meeting minutes.

While the protocols released on Wednesday document a meeting held in late July, the perceived enthusiasm to tighten print fewer dollars is underpinning the currency. Moreover, the bank announced that Fed Chair is set to speak at the Jackson Hole Symposium, and the mere update – not a surprise – served as a reminder of the tapering topic. 

Apart from echoes from the minutes, the dollar is driven higher by growing coronavirus concerns. The Delta COVID-19 variant continues wreaking havoc in America, putting pressure on some hospitals in the south and also infecting three vaccinated Senators. If the immunized and well-off cannot avoid the disease, who can?

Moreover, the White House is pushing for allowing Americans to receive a third, booster shot, to all Americans – not only the elderly. That also adds to worries that push investors to the safety of the dollar. 

In Europe, while some countries that first bore the brunt of Delta are seeing declines – for example, Spain – infections are up in Germany. The old continent's powerhouse has reported the highest number of cases in three months and some fear new restrictions could be imposed. 

Overall, the fundamental picture remains in favor of the dollar – at least on Friday, as traders would prefer taking risks off the table. 

Later on, there are reasons to doubt that the Fed would indeed rush to the exits. Data since that July meeting was downbeat, including signs that inflation is falling. Delta is also set to peak, like other waves. Nevertheless, a "risk-on" move will have to wait. 

See Dollar selling opportunity? Three reasons (and charts) explaining why the King may crash

EUR/USD Technical Analysis

Euro/dollar's dead-cat bounce and failure to recapture 1.17 is a bearish sign – and downside momentum on the four-hour chart is not helping either. Bears remain in full control as long as the Relative Strength Index (RSI) remains above 30, outside oversold conditions.

Support awaits at the fresh low of 1.1666. It is followed by levels that were last seen in 2020, including 1.1610 and 1.15.

Resistance is at 1.17 mentioned earlier, followed by 1.1720 and 1.1740.

When is a taper not a rate hike? Whenever the Fed says so