EUR/USD Forecast: Nearing 1.1200 with limited upward strength

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1194

German inflation keeps reaching multi-decade highs, with EU growth remaining constrained.
Global stocks trade with a better tone, although cautious prevails ahead of first-tier events.
EUR/USD is correcting oversold conditions may advance further once above 1.1205.

The EUR/USD pair trades around 1.1190 in a slow start to a busy week. The dollar gave up some ground across the board, but the slide seems mostly corrective after the post-Fed sharp appreciation. Meanwhile, stocks kick-started the week with a mixed tone, although most Asian and European indexes trade in the green, while US government bond yields ticked higher, but not enough to revive the dollar’s demand.

European data came in mixed. The EU Q4 Gross Domestic Product printed at 0.3% as expected, according to preliminary estimates. Germany published the first estimate of the January Consumer Price Index, which jumped to 4.9% YoY. The harmonized reading came in at 5.1%, below the previous 5.7%, but above the 4.7% expected.

The US macroeconomic calendar has little to offer today, as the country will only publish the January Chicago Purchasing Manufacturing Business Index, foreseen at 9.9 from 8.1 previously.

EUR/USD short-term technical outlook

The EUR/USD pair trades below the 23.6% retracement of its latest daily decline at 1.1205, an immediate resistance level. The daily chart shows that the pair keeps developing far below bearish moving averages, while technical indicators have recovered modestly but remain within negative levels without bullish strength.

In the near-term, and according to the 4-hour chart, the pair has advanced above a firmly bearish 20 SMA, while technical indicators corrected extreme oversold readings but so far are unable to overcome their midlines. The Momentum keeps heading north, yet the RSI turned flat at around 46, indicating limited buying interest.

Support levels: 1.1150 1.1105 1.1060

Resistance levels: 1.1205 1.1245 1.1290

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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