EUR/USD Forecast: EUR among the weakest USD rivals, following ECB's Villeroy comments
EUR/USD Current Price: 1.1286
- ECB’s Villeroy said he expected inflation in the euro area to fall by the end of 2022.
- The American dollar lost momentum during US trading hours, but selling was limited.
- EUR/USD maintains the sour tone below 1.1300, strong support at 1.1220.
The EUR/USD pair is trading in the 1.1280 price zone, little changed for the day. The dollar remained strong through the first half of the day, resulting in the pair bottoming at 1.1271. The dollar came under strong selling pressure at the beginning of the American session, which pushed the pair up to 1.1322. However, the EUR was unable to retain gains, despite other currencies having success.
Bank of France Governor Francois Villeroy was on the wires this Tuesday and said he expects inflation in the euro area to peak in the coming months and to fall below 2% by the end of 2022. Data wise, Germany published November Retail Sales, which were up 0.6% MoM, much better than the -0.5% expected. The US published the December ISM Manufacturing PMI, which contracted more than anticipated, to 58.7 from 61.1, and November JOLTS Job Openings, which printed at 10.562 million.
On Wednesday, Markit will publish the final readings of December Services PMIs for the EU and the US, while the latter will unveil the December ADP survey on private job creation, foreseen at 400K from 534K in the previous month.
EUR/USD short-term technical outlook
The risk for EUR/USD remains skewed to the downside, although the bearish picture will be clearer if the pair breaks below 1.1220, the December monthly low. The daily chart shows that the pair is hovering just below a flat 20 SMA, while the longer ones maintain their bearish slopes above the level. The Momentum indicator heads south around the 100 level, while the RSI is now flat at around 46.
In the near term, and according to the 4-hour chart, technical readings are more supportive of a downside extension. The pair is currently developing below all of its moving averages after peaking at around a mildly bearish 20 SMA. The Momentum indicator maintains its bearish slope within negative levels, while the RSI indicator is flat at around 43.
Support levels: 1.1260 1.1220 1.1185
Resistance levels: 1.1305 1.1340 1.1385
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.
