EUR/USD Forecast: Euro trades dangerously close to key support area
|- EUR/USD stays below 1.0950 after closing in the red on Tuesday.
- Technical sellers could take action if the pair breaks below 1.0900.
- Markets will keep a close eye on the 10-year US Treasury note auction later in the day.
EUR/USD edged lower on Tuesday as the risk-averse market atmosphere helped the US Dollar (USD) gather strength against its rivals. The pair struggles to stage a rebound early Wednesday and trades below 1.0950.
Euro price this week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.05% | 0.12% | 0.20% | 0.27% | 0.13% | 0.16% | 0.21% | |
| EUR | -0.05% | 0.08% | 0.16% | 0.23% | 0.10% | 0.12% | 0.16% | |
| GBP | -0.12% | -0.08% | 0.08% | 0.15% | 0.02% | 0.04% | 0.09% | |
| CAD | -0.20% | -0.15% | -0.08% | 0.07% | -0.04% | -0.04% | 0.02% | |
| AUD | -0.25% | -0.22% | -0.15% | -0.06% | -0.11% | -0.10% | -0.04% | |
| JPY | -0.16% | -0.08% | -0.01% | 0.08% | 0.15% | 0.03% | 0.07% | |
| NZD | -0.14% | -0.12% | -0.04% | 0.04% | 0.11% | -0.02% | 0.05% | |
| CHF | -0.21% | -0.17% | -0.09% | -0.01% | 0.07% | -0.07% | -0.04% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
The bearish opening in Wall Street provided a boost to the USD in the American session on Tuesday and caused EUR/USD to stretch lower. In the European morning, US stock index futures trade modestly lower on the day as investors grow increasingly concerned over the potential impact of escalating geopolitical tensions in the Middle East on energy prices and inflation. According to the CNBC News, Iran-backed Houthi militants launched the largest attack to date on commercial merchant vessels in the Red Sea late Tuesday.
The US economic docket will not feature any high-impact data releases on Wednesday and market participants will pay close attention to the 10-year US Treasury note auction. Since rising to 4.61% in October auction, the high-yield declined to 4.5% and 4.29% in November and December, respectively. In case the high-yield comes in below 4% in January auction, the USD could come under renewed bearish pressure and help EUR/USD gain traction.
Later in the American session, Federal Reserve Bank of New York President John Williams will be delivering a speech. Following the December policy meeting, Williams said that it was premature to talk about the timing of a policy pivot. In case Williams clings to the hawkish tone, the USD could hold its ground.
EUR/USD Technical Analysis
EUR/USD trades dangerously close to 1.0920, where the 200-period Simple Moving Average (SMA) on the 4-hour chart is located. Just below that level, the lower-limit of the ascending regression trend channel aligns as next support at 1.0900. A 4-hour close below the latter could attract technical sellers and open the door to an extended decline toward 1.0850 (Fibonacci 38.2% retracement of the latest uptrend).
On the upside, near-term resistances are located at 1.0960-1.0970 (Fibonacci 23.6% retracement, 100-period SMA), 1.1000 (psychological level, static level) and 1.1050 (mid-point of the ascending channel).
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