EUR/USD Forecast: Holding ground as the mood improved

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1333

European data came in worse than anticipated, undermining demand for the shared currency.
The US ADP report showed that the private sector added 543K new positions in November.
EUR/USD is neutral-to-bullish in the near term, needs to break 1.1380 resistance.

The EUR/USD pair is trading around 1.1330, little changed on a daily basis throughout the first half of the day. The dollar ticked higher as the market’s mood improved somehow. Asian and European shares are up, leading to modest gains in US indexes. Nevertheless, a certain caution persists amid uncertainty related to the coronavirus Omicron variant. The latest on the matter came from the WHO, as an official noted that early indications point that cases related to the strain are mild. Still, it will take a couple of weeks before it is clearer how much of a concern it is.

Data coming from Europe resulted discouraging. Germany released October Retail Sales, which were down by 2.9% YoY, worst than the -2% expected. Also, Markit published the final readings of its November Manufacturing PMIs. The German reading was downwardly revised to 57.4, while the EU figure was confirmed at 58.4, below the preliminary estimate of 58.6.

On the other hand, the US has just published the November ADP report, which showed that the private sector added 543K positions in the month, better than the 525K expected. After Wall Street’s opening, the country will publish the official ISM Manufacturing PMI, foreseen at 61 in November from 60.8 previous, while US Federal Reserve Chair Jerome Powell will repeat its testimony on the CARES act before a different Senate Commission. The impact will likely be limited as he already surprised markets on Tuesday.

EUR/USD short-term technical outlook

The EUR/USD pair is trading just above the 23.6% retracement of its November slide at 1.1305, the immediate support level. The daily chart suggests that the latest advance has been corrective, as the rally stalled around the 38.2% retracement of the mentioned decline, where it also has a firmly bearish 20 SMA. At the same time, technical indicators have continued to correct oversold conditions but currently turned flat within negative levels, indicating limited buying interest.

In the near term, and according to the 4-hour chart, the pair is neutral-to-bullish, as it keeps bouncing from a bullish 20 SMA but is unable to advance beyond a mildly bearish 100 SMA. Meanwhile, technical indicators remain directionless within positive levels. The pair can gain bearish momentum on a clear break below 1.1305, while bulls may have a chance if the pair rallies beyond 1.1380.

Support levels: 1.1305 1.1260 1.1210

Resistance levels: 1.1380 1.1425 1.1470

View Live Chart for the EUR/USD

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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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