EUR/USD Forecast: dollar's weakness leading the way

Stable equities and lower T-yields sent the dollar down across the board.
Light macroeconomic calendar in Europe and the US ahead of Wednesday's first-tier data.

Valeria Bednarik FXStreet

The EUR/USD pair regained the 1.2300 level and trades at its highest in almost a week, around 1.2320, as equities market's stability put the greenback under pressure across the board. The EU macroeconomic calendar has nothing to offer today, while in the US, only minor releases will be out, including NFIB Business Optimism Index for January and a speech from Fed's Mester.

European equities hover around their opening levels, while US Treasury yields sharply down as the 10-year note benchmark hovers around 2.82%, its lowest for the week, after hitting 2.90% early Monday to close at 2.86%. Easing yields are the main reason the greenback eases.

The pair presents a modest upward potential short-term, still lacking enough momentum to confirm a steeper advance. In the 4 hours chart, technical indicators entered positive territory but lost their upward strength, while the price is now above its 20 and 200 SMAs, although still below the 100 SMA, this last around 1.2365. An encouraging reading is the fact that the pair is above the 38.2% retracement of its January rally at 1.2300, now the immediate support.

Should the advance continue, the next critical resistance will be the 1.2400 price zone, with gains beyond the level seen unlikely for today amid the absence of a fresh catalyst. Below 1.2300, on the other hand, supports come at 1.2260 and 1.2225.

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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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