EUR/USD Forecast: Dollar keeps shining, break below 1.1100 expected

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1111

Dismal German data alongside encouraging US figures added pressure on the pair.
Middle-East tensions ease after US President Trump refrained from announcing more hostilities.
EUR/USD looking to extend its decline below the 1.1100 figure.

The American currency is the overall winner this Wednesday, up against all of its major rivals. The day began with panic and sellers rushing into safe-haven assets, as Iran attacked US military basis in Iraq, in retaliation to the killing of Major General Suleimani last week. The EUR/USD pair appreciated just modestly to hit a daily high of 1.1167, but it was all downhill from there. Sentiment improved as authorities from both countries hinted a deescalation of hostilities, with US President Trump offering a speech post-London close. Among other things, he said that Iran appears to be standing down, announced more sanctions on the country, but no other retaliation, pouring cold water on chances of more hostilities.

Macroeconomic data also weighed on the pair, as German Factory Orders plummeted in November, down by 1.3% MoM and by 6.5% YoY, well below the market’s expectations of a bounce. The US ADP survey showed that the private sector added 202K new jobs in December, largely surpassing the 160K forecast, and hinting a solid Nonfarm Payroll report, to be out later this week.

On Thursday, Germany will take centre stage, as it will publish November Trade Balance and Industrial Production, this last seen up by 0.7% MoM and down by 3.8% YoY. The US calendar will be lighter as it will only release the usual weekly unemployment figures.

EUR/USD short-term technical outlook

The EUR/USD pair settled at around 1.1110, below the 61.8% retracement of its latest December rally and barely above its daily low. The pair is technically bearish according to the 4-hour chart, as it is comfortable below its 20 and 100 SMA, with the shortest accelerating its decline. The 200 SMA, in the meantime, provides dynamic support around the 1.1100 figure. Technical indicators indicate an increasing bearish pressure, maintaining their bearish slopes near oversold readings.

Support levels: 1.1100 1.1065 1.1020

Resistance levels: 1.1135 1.1160 1.1200

View Live Chart for the EUR/USD

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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