EUR/USD Current Price: 1.0562
- United States macroeconomic figures may set the tone for the rest of the day.
- Euro Area Retail Sales contracted by more than anticipated in October, down by 1.8% MoM.
- EUR/USD retains its bullish strength in a slow start of the week, could surge beyond 1.0600.
The EUR/USD pair surged at the weekly opening and hit a fresh six-month high of 1.0584, shedding some ground later to trade at around 1.0560 ahead of the US opening. The buoyant market mood came from Chinese-related headlines, as the country is easing its coronavirus restrictive measures, despite record contagions. Authorities in various districts have announced less strict measures, including home quarantine and reopening certain businesses. The US Dollar fell as speculative interest opted for riskier assets.
Optimism faded early in the European session amid tepid EU data, weighing on the EUR. S&P Global released the final readings of its November Services PMIs. The German figure was downwardly revised to 46.1, while the EU one was confirmed at 48.5, down from 48.6. Additionally, Retail Sales in the Euro Area fell by 1.8% MoM in October, while the yearly reading posted a 2.7% decline. Finally, December Sentix Investor Confidence printed at -21, improving from -30.9 in the previous month.
Ahead of the December central bank’s meeting, European Central Bank (ECB) policymaker Gabriel Makhlouf said that a 50 bps rate hike is the minimum necessary, adding that he would not rule out a 75 bps hike. The ECB and the US Federal Reserve (Fed) will announce their decisions on December 15 and 14, respectively, and policymakers will enter their blackout period next Thursday.
The United States session will bring the S&P Global Services PMI and the official ISM Services PMI. The latter is expected at 53.1 from 54.4 in October. Also, the macroeconomic calendar will include October Factory Orders.
EUR/USD short-term technical outlook
The EUR/USD pair holds on to most of its early gains, and the daily chart shows that the risk is skewed to the upside. The pair is posting a third consecutive higher high, also higher lows, while extending gains beyond its 200 Simple Moving Average (SMA), currently at 1.0360. The 20 SMA kept advancing below the longer one and is close to crossing above it. Technical indicators, in the meantime, remain directionless, with the Momentum within positive levels and the Relative Strength Index (RSI) at around 70, without signs of bullish exhaustion.
The 4-hour chart shows that bulls retain control. An early dip to 1.0518 was quickly reverted, reflecting strong buying interest. At the same time, moving averages maintain their upward slopes below the current level, with the 20 SMA accelerating north and providing dynamic support at around 1.0480. Technical indicators lack directional strength but hold well above their midlines, in line with the absence of selling power.
Support levels: 1.0520 1.0480 1.0445
Resistance levels: 1.0585 1.0630 1.0680
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