EUR/USD Forecast: Renewed buying interest as optimism returns
EUR/USD Current Price: 1.2167
- Investors are waiting for US Fed Powell’s words on the future of QE.
- Risk appetite put a halt to yields rally and pressured the greenback.
- EUR/USD is trading just ahead of a critical resistance area in the 1.2170/80 price zone.
The greenback edged lower on Monday, trading against its major rivals alongside equities. The EUR/USD pair traded as high as 1.2169, heading into the US close trading a handful of pips below the level. Encouraging European data provided support to the shared currency, as Germany published the February IFO Business Climate, which improved to 92.4 from a revised 90.3, as expectations and the assessment of the current situation improved by more than anticipated.
The greenback enjoyed some short-lived demand as US Treasury yields reached fresh one-year highs, with that on the 10-year note peaking at 1.394% but retreated alongside. Equities, in the meantime, traded with a soft tone, pulling off daily lows but unable to post substantial gains. Nevertheless, optimism took over speculative interest amid hopes for a soon to come economic comeback.
This Tuesday, the EU will publish the final version of January inflation, foreseen unchanged from preliminary estimates at 1.4% YoY. The US will publish the February CB Consumer Confidence index, foreseen at 90.2 from 89.3 previously. Also, US Federal Reserve chief, Jerome Powell, is due to testify before Congress. Investors are waiting for any hint on QE tapering.
EUR/USD short-term technical outlook
The EUR/USD pair retains its early gains but has lost its bullish momentum, stalling its advance just ahead of the 1.2170/80 price zone. In the 4-hour chart, the pair is firmly anchored above all of its moving averages, but only the 20 SMA turned higher. Technical indicators neared overbought readings before turning lower, holding within positive levels. Overall, the risk is skewed to the upside, but the pair needs to clear the mentioned resistance to be able to extend its advance.
Support levels: 1.2130 1.2090 1.2050
Resistance levels: 1.2175 1.2210 1.2250
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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.
