EUR/USD Forecast: Bulls cautiously adding longs
EUR/USD Current Price: 1.0765
- German inflation rose less than anticipated in January, up by 9.2% YoY.
- Easing Treasury yields and the positive tone of equities undermined demand for the USD.
- EUR/USD grinds higher and approaches its weekly high at 1.0798.
-638115441286244901.png&w=1536&q=95)
The EUR/USD pair recovered ground on Thursday and trades in the 1.0760 price zone ahead of the US opening after hitting an intraday high of 1.0777. A better market mood alongside sliding US Treasury yields undermined US dollar demand.
Softer-than-anticipated German inflation figures triggered a short-lived knee-jerk as the Harmonized Index of Consumer Prices (HICP) unexpectedly rose by 9.2% YoY in January, below the 10% expected and easing from the previous 9.6%. On the one hand, easing inflationary pressures are welcomed news, yet on the other, it means the European Central Bank (ECB) can decelerate the pace of tightening.
Also, European Central Bank (ECB) member and Bank of France head Francois Villeroy de Galhau hit the wires and said that, as of today, he thinks he can exclude a recession in the French economy. His words provided additional support to the Euro.
The United States will publish Initial Jobless Claims for the week ended February 3, foreseen at 190K, with no other relevant figures scheduled for today.
EUR/USD short-term technical outlook
The EUR/USD pair trades below its weekly high of 1.0798 achieved on Monday, and a handful of pips above a relevant Fibonacci level, the 61.8% retracement of the 2022 yearly slide. Technical indicators have pared their declines and turned marginally higher, although they lack enough strength while holding within negative levels. At the same time, the 20 Simple Moving Average (SMA) gains downward traction above the current level, while the longer ones stand far below the current level. Overall, chances of a steeper advance remain limited.
The 4-hour chart offers a neutral stance, also reflecting bulls’ desire to return. Technical indicators remain directionless around their midlines, while the price is currently hovering around a flat 200 SMA. The 20 SMA, in the meantime, remains below the current level, although also unable to provide directional clues. Bulls may take their chances if the pair extends the current recovery beyond the 1.0800 threshold.
Support levels: 1.0745 1.0700 1.0660
Resistance levels: 1.0795 1.0840 1.0845
Premium
You have reached your limit of 3 free articles for this month.
Start your subscription and get access to all our original articles.
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
