EUR/USD Forecast: Bulls trying once again

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.2107

Germany and the US will publish updates on January inflation this Wednesday.
US Treasury yields edge lower, dragging the greenback alongside.
EUR/USD is holding on to daily gains, has room to extend its advance.

The EUR/USD pair peaked at 1.2115, its highest in a week, as the greenback eased alongside US Treasury yields. After reaching levels last seen in March 2020, US government debt yields gave up, as investors await progress on a coronavirus-relief package. Stocks traded mixed in Europe and America, but remain near their opening levels, failing to provide directional clues.

Germany published the December Trade Balance, which posted a surplus of €16.1 billion, below expected. In the same month, the Current Account Balance was also below expected but improved to €28.2 billion from €21.2 billion in November. The US published the NFIB Business Optimism Index, which printed in January at 95, down from the previous 95.7. The December JOLTS Job Openings came in at 6.646 million, better than the 6.5 million expected.

This Wednesday, Germany and the US will release the final versions of their respective January inflation figures. US Federal Reserve chief’s Powell is scheduled to speak in the American afternoon.

EUR/USD short-term technical outlook

The EUR/USD pair retreated just modestly from the mentioned high, trading a handful of pips above the 1.2100 level. EUR/USD is trading above the 38.2% retracement of its November/January rally after recovering from the 50% retracement, which opens the door for a steeper recovery, yet to be confirmed. In the 4-hour chart, the pair is comfortable above a flat 100 SMA, while the 20 SMA advances below it. Technical indicators have topped near overbought readings, partially losing their bullish strength. Further gains are likely on a break above 1.2120, the immediate resistance level.

Support levels: 1.2075 1.2025 1.1970

Resistance levels: 1.2120 1.2160 1.2205

View Live Chart for the EUR/USD

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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.

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