|

EUR/USD Forecast: Bears now await a break below 1.1065 confluence support

  • EUR/USD remained under pressure for the second consecutive session on Friday.
  • Some follow-through USD strength turned out to be a key factor exerting pressure.
  • The focus now shifts to this week’s ECB policy meeting, flash Eurozone PMI prints.

The EUR/USD pair witnessed some aggressive follow-through selling for the second consecutive session on Friday and tumbled to levels below the 1.1100 round-figure mark amid some follow-through US dollar buying interest. The greenback remained well supported by the previous session's upbeat Retail Sales and got an additional boost from signs that the consumer remains in good shape. Data released on Friday showed the University of Michigan's preliminary consumer sentiment index for January edged down to 99.1 from a seven-month high of 99.3 in December.

Adding to this, housing starts rose 16.9% to a seasonally adjusted annual rate of 1.61 million units in December and largely offset a 3.9% decline in building permits to a rate of 1.42 million units. The incoming economic releases added to growing expectations that the US economy will continue to expand and might have also reduced the likelihood of any further interest rate cuts by the Fed. This comes on the back of the latest optimism over the US-China phase one trade-deal and allowed the US Treasury bond yields to tick higher, which eventually underpinned the USD.

The pair finally settled near the lower end of its weekly trading range but once again managed to find some support near monthly lows, around the 1.1085 region. The pair managed to regain some positive traction on the first day of a new trading week as the focus now shifts to this week's key event risk – the latest monetary policy update by the European Central Bank (ECB) on Thursday. This will be followed by the flash version on Eurozone Manufacturing and Services PMI prints, which will play a key role in influencing the sentiment surrounding the shared currency and provide a fresh directional impetus.

Short-term technical outlook

From a technical perspective, the pair, so far, has held a support marked by 61.8% Fibonacci level of the 1.0981-1.1239 positive move. This is closely followed by the 1.1065 confluence region, comprising of the lower end of near four-month-old ascending trend-channel and 100-day SMA, which if broken will set the stage for a further near-term depreciating move. Below the mentioned support, the pair is likely to accelerate the slide towards challenging the key 1.10 psychological mark before eventually sliding to November monthly swing lows support near the 1.0980 region.

On the flip side, immediate support is now pegged near the 1.1110 region (50% Fibo. level), above which the positive move could get extended back towards the 1.1140-50 supply zone – nearing 38.2% Fibo. level. Any subsequent strength might continue to confront some resistance near the 1.1175-80 region (23.6% Fibo. level), which if cleared might negate the near-term bearish outlook. The pair then seems all set to surpass the 1.1200 handle and aim towards retesting late December swing high resistance near the 1.1240 region. The momentum could further get extended towards the 1.1300 round figure mark en-route a resistance marked by the top end of a multi-month-old ascending trend-channel, currently near the 1.1320 region.

fxsoriginal

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

More from Haresh Menghani
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD moves sideways below 1.1800 on Christmas Eve

EUR/USD struggles to find direction and trades in a narrow channel below 1.1800 after posting gains for two consecutive days. Bond and stock markets in the US will open at the usual time and close early on Christmas Eve, allowing the trading action to remain subdued. 

GBP/USD keeps range around 1.3500 amid quiet markets

GBP/USD keeps its range trade intact at around 1.3500 on Wednesday. The Pound Sterling holds the upper hand over the US Dollar amid pre-Christmas light trading as traders move to the sidelines heading into the holiday season. 

Gold retreats from record highs, trades below $4,500

Gold retreats after setting a new record-high above $4,520 earlier in the day and trades in a tight range below $4,500 as trading volumes thin out ahead of the Christmas break. The US Dollar selling bias remains unabated on the back of dovish Fed expectations, which continues to act as a tailwind for the bullion amid persistent geopolitical risks.

Bitcoin slips below $87,000 as ETF outflows intensify, whale participation declines

Bitcoin price continues to trade around $86,770 on Wednesday, after failing to break above the $90,000 resistance. US-listed spot ETFs record an outflow of $188.64 million on Tuesday, marking the fourth consecutive day of withdrawals.

Economic outlook 2026-2027 in advanced countries: Solidity test

After a year marked by global economic resilience and ending on a note of optimism, 2026 looks promising and could be a year of solid economic performance. In our baseline scenario, we expect most of the supportive factors at work in 2025 to continue to play a role in 2026.

Avalanche struggles near $12 as Grayscale files updated form for ETF

Avalanche trades close to $12 by press time on Wednesday, extending the nearly 2% drop from the previous day. Grayscale filed an updated form to convert its Avalanche-focused Trust into an ETF with the US Securities and Exchange Commission.