EUR/USD Forecast: near weekly highs but upside potential limited

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1445

Risk appetite underpins high-yielding currencies, thin volumes keeping majors within familiar levels.
German inflation rose by less-than-expected in December, according to preliminary estimates.

The EUR/USD pair extended its weekly advance up to 1.1472 during the London session, amid a return of appetite for riskier assets, with most indexes up in Asia and solid gains in European ones. The pair, however, was unable to sustain gains and retreated to its comfort zone around 1.1450. The common currency didn´t react to tepid German inflation, which rose by less-than-expected in December, according to preliminary estimates, up 0.1% MoM and 1.7% YoY.

The greenback is gaining some ground ahead of Wall Street's opening, with US indexes poised to open higher. The US should publish the December Chicago PMI, foreseen at 62.0 vs. the previous 66.4, Pending Home Sales, expected to have declined 0.7% in November, and New Home Sales for the same month, anticipated to have risen by 2.9%. Given the US government shutdown, some data could be delayed until the government resumes activity.

The pair retains a positive tone according to the 4 hours chart, although the 1.1460/80 region is a tough static resistance area that won't be easy to break. In the mentioned chart, the pair is well above its moving averages, with the 20 SMA gaining upward strength. Technical indicators are neutral-to-bullish within positive levels, below their daily highs, indicating limited buying interest.

Support levels: 1.1420 1.1390 1.1360

Resistance levels: 1.1480 1.1510 1.1545

View Live chart for the EUR/USD

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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