- EUR/USD has been fluctuating in a tight channel following a two-day decline.
- The pair could edge higher in case buyers continue to defend 1.0450.
- Easing of coronavirus restrictions in China doesn't seem to be helping the market mood improve.
EUR/USD has been moving sideways below 1.0500 since the beginning of the day on Wednesday after having closed the first two days of the week modestly lower. The near-term technical outlook suggests that the pair could stage a rebound in case it manages to hold above 1.0450.
In the absence of high-impact macroeconomic data releases, the risk-averse market environment helped the US Dollar preserve its strength on Tuesday and forced EUR/USD to edge lower during the American trading hours.
In its continuous effort to move away from the zero-Covid policy, China announced early Wednesday that they will allow asymptomatic and mildly-symptomac positive cases to quarantine at home for seven days. Furthermore, the Chinese government said that mass PCR testing will be restricted to hospitals, schools and nursing homes.
This development, however, doesn't seem to be having a noticeable impact on risk mood so far on the day. US stock index futures trade flat on the day and the US Dollar Index, which is already up 1% this week, holds steady slightly above 105.50.
If investors cheer China news and there is a steady recovery in Wall Street's main indexes in the second half of the day, the US Dollar could lose interest and open the door for a rebound in EUR/USD.
The US economic docket will feature Nonfarm Productivity and Unit Labor Costs data for the third quarter. Last week, the US Bureau of Labor Statistics reported that the annual wage inflation, as measured by the Average Hourly Earnings, rose to 5.1% from 4.9% in October. Unit Labor Costs are forecast to decline to 3.2% in Q3. A stronger-than-forecast print should support the US Dollar and vice versa.
EUR/USD Technical Analysis
The 50-period Sİmple Moving Average on the four-hour chart and the Fibonacci 38.2% retracement of the latest uptrend form strong support at 1.0450. In case EUR/USD falls below that level and starts using it as resistance, it could extend its slide toward 1.0400, where the 100-period SMA and the Fibonacci 50% retracement align.
On the upside, 1.0500 (Fibonacci 23.6% retracement) aligns as initial resistance before 1.0520 (20-period SMA) and 1.0580 (static level).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.