EUR/USD remains vulnerable below 1.1300 on USD rebound, ahead of US data
EUR/USD is retreating from 1.1300, snapping a two-day uptrend. Cautious mood revives the US dollar’s safe-haven demand, despite weaker yields. US inflation expectations recover ahead of GDP and Consumer Confidence data. Omicron news and Biden’s speech eyed as well.
The Relative Strength Index (RSI) indicator on the daily chart returned to 50 early Wednesday, pointing to the pair’s indecisiveness in the near term.
Currently, EUR/USD is testing the static support that is located at 1.1270 and if a four-hour candle closes below that level, additional losses toward 1.1240, the next static level, could be witnessed. 1.1200 (psychological level) aligns as the next target on the downside but an extended decline toward that support is unlikely unless fueled by a fundamental driver.
On the upside, key resistance aligns at 1.1295/1.1300 (100-period SMA, psychological level, upper limit of the current trading range) before 1.1320 (static level) and 1.1330 (200-period SMA).
Fundamental Overview
| GMT | Event | Vol. | Actual | Consensus | Previous |
|---|---|---|---|---|---|
| WEDNESDAY, DEC 22 | |||||
| 07:00 | GBP Gross Domestic Product (QoQ) | 1.1% | 1.3% | 1.3% | |
| 07:45 | EUR Producer Prices (MoM) | 3.5% | 2.5% | 2.9% | |
| 09:00 | EUR Trade Balance non-EU | €4.210B | €3.597B | ||
| n/a | EUR Current Account Balance | €-1.722B | |||
| 12:00 | USD MBA Mortgage Applications | -4% | |||
| n/a | USD President Biden speech | ||||
| 13:30 | USD Chicago Fed National Activity Index | 0.76 | |||
| 13:30 | USD Gross Domestic Product Annualized | 2.1% | 2.1% | ||
| 13:30 | USD Gross Domestic Product Price Index | 5.9% | 5.9% | ||
| 13:30 | USD Personal Consumption Expenditures Prices (QoQ) | 5.3% | 5.3% |
EUR/USD has failed to attract buyers after failing to rise above the technical resistance that seems to have formed around 1.1300 and came under modest bearish pressure early Wednesday. The greenback’s market valuation continues to drive the pair’s action and the high-tier data releases from the US in the second half of the day will help investors decide whether it can break out of its two-week-old trading range.
Although the improving market mood made it difficult for the dollar to find demand on Tuesday, the currency managed to stay resilient against its major rivals with the benchmark 10-year US Treasury bond yield rising toward 1.5%. The US Dollar Index, which tracks the buck’s performance against a basket of six major currencies, is holding in the positive territory above 96.50 in the early European session.
Later in the day, the US Bureau of Economic Analysis will release the final revision of the annualized third-quarter GDP growth, which is expected to remain unchanged at 2.1%. The Conference Board will also publish the December Consumer Confidence report.
Conference Board Consumer Confidence December Preview: Where do Americans turn for optimism?
In case the data come in near market consensus, the dollar is likely to hold its ground and not allow EUR/USD to stage a rebound. On the other hand, disappointing figures could weigh on the greenback and trigger a recovery in the pair. Nevertheless, thin trading conditions ahead of the Christmas holiday should cause the pair to continue to fluctuate between key technical levels.
In the meantime, European Central Bank (ECB) Executive Board member Isabel Schnabel said on Wednesday that the normalization of the monetary policy will be gradual and noted reiterated inflation is expected to decline over the course of next year.
About The Author
