EUR/USD Forecast: Poor US employment-related data undermines dollar’s demand

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1351

The EU December Consumer Price Index was confirmed at 5% YoY, as previously estimated.
US Initial Jobless Claims unexpectedly jumped to 286K in the week ended January 7.
EUR/USD bounces from its intraday low but maintains a neutral stance in the near term.

The EUR/USD pair has eased from the high of the day at 1.1368 and is seen trading in the 1.1350 area heading into the US opening. The greenback is trading mixed across the FX board – weaker against commodity-linked currencies but grinding higher vs its European rivals. Financial markets are quieter on Thursday, with European stocks lost and glued to their opening levels.

The EU published the December Consumer Price Index, which was confirmed at 5% YoY, while the core reading met the preliminary estimate posting 2.6%. Also, the European Central Bank posted the Accounts of its latest meeting, which showed that policymakers are aware of a possible "higher for longer" inflation scenario.

The US published Initial Jobless Claims for the week ended January 7, which unexpectedly jumped to 286K, much worse than the 220K expected. The Philadelphia Fed Manufacturing Survey surged from 15.4 to 23.2 in January, beating expectations. The news put some pressure on the greenback, now recovering from its daily low at 1.1330.

EUR/USD short-term technical outlook

The EUR/USD pair could resume its decline in upcoming sessions, as there are no technical signs of buying interest. The daily chart shows that the pair is incapable of advancing beyond a flat 20-SMA for a second consecutive day, while the Momentum indicator heads lower within negative levels. Additionally, the RSI is stable, although around 49.

The pair is trapped trading between Fibonacci levels, with immediate support at 1.1305, the 23.6% retracement of the 1.1691/1.1185 slide. The 38.2% retracement is located at 1.1385, providing strong resistance since mid-November.

In the near term, and according to the 4-hour chart, the pair maintains a neutral-to-bearish stance, trading below a firmly bearish 20-SMA but between directionless 100 and 200-SMA. Technical indicators, in the meantime, remain within negative levels, the Momentum advancing but the RSI flat at around 44.

Support levels: 1.1305 1.1260 1.1220

Resistance levels: 1.1385 1.1440 1.1485

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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