EUR/USD Forecast: Euro could test 1.0900 ahead of the weekend

EUR/USD holds steady at around 1.0850 in the European session on Friday.
Improving risk mood and falling US yields could weigh on the USD ahead of the weekend.
The pair could face stiff resistance at 1.0900.

Eren Sengezer FXStreet

Following Thursday's indecisive action, EUR/USD extended its sideways grind at around 1.0850 early Friday. The pair's technical outlook suggests that the bullish bias stays intact. In the absence of high-tier macroeconomic data releases, risk sentiment could drive EUR/USD's action ahead of the weekend.

Disappointing macroeconomic data releases from the US made it difficult for the US Dollar (USD) to stay resilient against its rivals. Initial Jobless Claims rose to 231,000 in the week ending November 11 from 218,000 and Industrial Production contracted by 0.6% on a monthly basis in October.

Early Friday, the USD struggles to find demand as the US Treasury bond yields continue to stretch lower. The benchmark 10-year US yield was last seen losing nearly 1% on the day at around 4.4%.

In the second half of the day, October Housing Starts and Building Permits data will be featured in the US economic docket. Market participants, however, are likely to pay closer attention to risk perception.

At the time of press, US stock index futures were up around 0.2% and the Euro Stoxx 50 Index was up 0.65%. In case risk flows continue to dominate the financial markets in the American session, the pair could add to its weekly gains.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart started to edge higher after falling to 60, suggesting that EUR/USD might have completed its correction after turning overbought mid-week.

On the upside, 1.0900 (psychological level, static level) aligns as next resistance for the pair before 1.0950 (Fibonacci 61.8% retracement of the July-October downtrend) and 1.1000 (psychological level, static level).

In case the pair fails to stabilize above 1.0850 (Fibonacci 50% retracement), supports could be seen at 1.0800 (psychological level, static level) and 1.0750 (50-period Simple Moving Average).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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