EUR/USD Forecast: Euro selloff to take a breather amid holiday trading

  • EUR/USD has been moving within a descending channel.
  • Thin trading conditions could open the door for a technical correction.
  • The pair could turn neutral in the near term with a daily close above 1.1300.

EUR/USD has touched its weakest level since June 2020 at 1.1185 on Wednesday but managed to rebound above 1.1200 in what seems to be a technical correction of this week's decline. Markets are likely to remain calm for the remainder of the day due to the Thanksgiving holiday in the US and the shared currency could stay resilient against the greenback. 

The Personal Consumption Expenditures (PCE) Price Index data from the US confirmed on Wednesday that inflation continues to run hot into the last quarter of the year. The 10-year US Treasury bond yield edged higher toward 1.7% and allowed the dollar to outperform its rivals. Furthermore, San Francisco Fed President Mary Daly, who earlier in the month said that the Fed should stay patient in the face of high inflation, noted that she sees a case for speeding up the asset taper.

Later in the session, the European Central Bank will release its Monetary Policy Meeting Accounts. At this point, it wouldn't be a surprise if the publication reiterated that the ECB's forward guidance does not point to a rate hike in 2022. Hence, the common currency's losses are likely to remain limited even if the ECB sticks to its dovish narrative. Several ECB policymakers, including President Christine Lagarde, will be delivering speeches on Thursday as well.

In the meantime, the data from Germany showed that consumer confidence is expected to deteriorate further in December. Additionally, Destatis reported that the German economy expanded by 2.5% on a yearly basis in the third quarter as expected.

EUR/USD Technical Analysis

On the four-hour chart, EUR/USD is trading above the descending regression channel coming from November 9. The Relative Strength Index (RSI) indicator on the same chart is holding near 40, suggesting that sellers are staying on the sidelines for the time being.

On the upside, initial resistance is located at 1.1240 (20-period SMA) ahead of 1.1300 (psychological level, 50-period SMA). Only a daily close above the latter could convince investors that the pair has turned neutral in the near term.

Supports are located at 1.1200 (psychological level), 1.1185 (2021-low) and 1.1140 (static level, former resistance).

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.

Feed news

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD: Bears are a run to test 1.12 the figure

EUR/USD is testing bullish commitments and there are prospects of more to go to the downside. EUR/USD is attempting to correct higher but is facing pressure from the bears. Bears are looking to the 1.12 figure as a target.


GBP/USD resumes decline, approaches the year low at 1.3194

GBP/USD trimmed early losses, accelerating its slump early US session, and trading in the 1.3220 region. Market players keeping an eye on the US 10-year Treasury note yield, and a possible break above 1.50%.


Gold: Consolidative phase continues, 1,758.80 still at sight

Spot gold seesaws within familiar levels, trading at the upper end of its latest range at around $1,786 a troy ounce, marginally higher for the day. The bright metal bottomed at 1,772.05, as the greenback appreciated ahead of Wall Street’s opening alongside US government bond yields. 

Gold News

Crypto market dazed post flash crash

Bitcoin gets a big bounce off the $44,000 value area, moving more than $7,000 higher. ETH is now sandwiched between solid support and strong resistance. XRP has one of the most potent and sought-after bullish reversal candlesticks forming on its chart: the hammer.

Read more

Cyber Monday 2021 Discounts!

Glued to your trading screen on Cyber Monday? Upgrade your skills by signing up for FXStreet’s Premium service, offered at a discount of up to 50%. Fellow traders have already taken advantage of Black Friday profits. What about you? 

Subscribe now!