EUR/USD Current price: 1.2219
- German political woes hit the EUR.
- Correction may continue, but bearish potential limited.
The EUR/USD pair fell to 1.2201 this Tuesday, with the common currency undermined by headlines indicating that German's coalition talks were not progressing as well as expected, as the SPD is against regulated migration policies. Germany also released its December inflation data during London trading hours, which remained unchanged from November figures, resulting in a non-event as usual. Greenback's correction pared after the release, with majors stabilizing ahead of the US opening, not far from their Monday's highs.
Short term, the downside potential remains limited as the intraday decline stalled around the 23.6% retracement of its latest bullish run, at 1.2200, now the immediate support. In the 4 hours chart, the 20 SMA keeps heading higher below the current level, now surpassing the 38.2% retracement of the same decline. Technical indicators in the mentioned chart have corrected extreme overbought conditions, with the Momentum indicator still heading south, but within positive territory, but the RSI indicator now stabilizing around 66, indicating that short-term selling interest has decreased.
Support levels: 1.2200 1.2160 1.2125
Resistance levels: 1.2265 1.2300 1.2340
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