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- The US Dollar charted a vacillating session on Thursday.
- EUR/USD remains supported by the 1.0900 zone so far.
- The pair’s next risk event is the release of US Payrolls.
EUR/USD managed to regain the smile and briefly revisited the 1.0970/75 band on Thursday, where bulls appear to have met initial resistance after four consecutive sessions under bears’ dominance.
On the flip side of the equation, the greenback traded without clear direction around the 102.40 zone. This inconclusive price action in the USD Index (DXY) came amidst the climb to three-week highs in US yields across different maturities.
The march north in US yields followed the hawkish tilt from the FOMC Minutes released late on Wednesday, in which members of the Committee suggested that the policy rate will peak during the tightening cycle, but the exact course of policy will depend on how the economy develops. Participants conceded that the dots plot indicates reductions by 2024, but they also admitted that the economy may change to allow for reasonable rate increases.
Contributing to the upward bias in the European currency emerged the higher-than-expected preliminary inflation figures in Germany for the month of December (+3.7% YoY), which could underpin the view that the ECB might keep its current level of interest rates for longer than anticipated.
Across the ocean, a firm ADP report in December seems to have reinforced the case for another firm reading of Nonfarm Payrolls in the same period, due on Friday.
EUR/USD daily chart
EUR/USD 4-hour chart
EUR/USD short-term technical outlook
If the EUR/USD continues to fall and breaks the so-far 2024 low of 1.0892 (January 3), it might face the crucial 200-day SMA at 1.0845, ahead of temporary conflict levels at the 55-day and 100-day SMAs of 1.0832 and 1.0760, respectively. If the latter is lost, the December 2023 low of 1.0723 (December 8) may reappear on the horizon. The convincing breach of the 200-day SMA should move the pair’s outlook to negative (from the current constructive one).
On the 4-hour chart, the bearish stance appears to be dominant amidst some incipient consolidative pattern, while the 1.0900 region remains a crucial conflict zone. The MACD appears to have bounced and props up a potential short-term rebound, while the RSI around 40 also allows for some corrective move higher. However, the extent and duration of it are unknown. The breach of the 1.0900 zone should not encounter significant support until the 1.0723 level, although this scenario appears to necessitate a significant worsening in the pair’s outlook (unlikely for the time being).
- The US Dollar charted a vacillating session on Thursday.
- EUR/USD remains supported by the 1.0900 zone so far.
- The pair’s next risk event is the release of US Payrolls.
EUR/USD managed to regain the smile and briefly revisited the 1.0970/75 band on Thursday, where bulls appear to have met initial resistance after four consecutive sessions under bears’ dominance.
On the flip side of the equation, the greenback traded without clear direction around the 102.40 zone. This inconclusive price action in the USD Index (DXY) came amidst the climb to three-week highs in US yields across different maturities.
The march north in US yields followed the hawkish tilt from the FOMC Minutes released late on Wednesday, in which members of the Committee suggested that the policy rate will peak during the tightening cycle, but the exact course of policy will depend on how the economy develops. Participants conceded that the dots plot indicates reductions by 2024, but they also admitted that the economy may change to allow for reasonable rate increases.
Contributing to the upward bias in the European currency emerged the higher-than-expected preliminary inflation figures in Germany for the month of December (+3.7% YoY), which could underpin the view that the ECB might keep its current level of interest rates for longer than anticipated.
Across the ocean, a firm ADP report in December seems to have reinforced the case for another firm reading of Nonfarm Payrolls in the same period, due on Friday.
EUR/USD daily chart
EUR/USD 4-hour chart
EUR/USD short-term technical outlook
If the EUR/USD continues to fall and breaks the so-far 2024 low of 1.0892 (January 3), it might face the crucial 200-day SMA at 1.0845, ahead of temporary conflict levels at the 55-day and 100-day SMAs of 1.0832 and 1.0760, respectively. If the latter is lost, the December 2023 low of 1.0723 (December 8) may reappear on the horizon. The convincing breach of the 200-day SMA should move the pair’s outlook to negative (from the current constructive one).
On the 4-hour chart, the bearish stance appears to be dominant amidst some incipient consolidative pattern, while the 1.0900 region remains a crucial conflict zone. The MACD appears to have bounced and props up a potential short-term rebound, while the RSI around 40 also allows for some corrective move higher. However, the extent and duration of it are unknown. The breach of the 1.0900 zone should not encounter significant support until the 1.0723 level, although this scenario appears to necessitate a significant worsening in the pair’s outlook (unlikely for the time being).
Read More:All the attention shifts to US NFP
2024-01-04 19:31:59
