EUR/USD Forecast: Risks favor a break above 1.1000
- The US Dollar slides across the board despite higher Treasury yields.
- The EUR/USD maintains a bullish bias, but technical indicators offer mixed signals.
- The pair must break above 1.1000 to clear the way for further gains.
The EUR/USD rose on Thursday to the 1.1000 area, boosted by renewed Dollar weakness, despite higher Treasury yields. Economic data from the US came in mixed, ahead of crucial consumer inflation data due on Friday.
Data from the US showed a decline in the Philadelphia Fed Index, a downward revision to Q3 GDP from 5.2% to 4.9%, and Jobless Claims showing little changes from the previous week. On Friday, the Federal Reserve's preferred inflation gauge, the Core Personal Consumption Expenditure Price Index (Core PCE), is due, with an expected 0.2% increase for November.
The inflation figure from the US will be closely scrutinized and could impact the US Dollar, which remains under pressure despite the rebound in US yields. The 10-year yield rose from a fresh multi-month low at 3.83% to 3.90%. The EUR/USD continues to receive support from a weaker US Dollar, but the upside seems limited amid thinned market conditions.
EUR/USD short-term technical outlook
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The EUR/USD was about to post its highest daily close since early August on Thursday but remained below the psychological area of 1.1000. From a technical perspective, a break above 1.1000 would open the door to further gains. However, considering the current market conditions, the timing of the breakout may not be ideal for Euro bulls. Technical indicators on the daily chart are biased towards the upside, pointing to a bullish breakout. The outlook for the Euro would weaken with a daily close below 1.0870.
On the 4-hour chart, technical indicators are not as bullish as the daily chart. The Relative Strength Index (RSI) is flat and about to turn south, momentum is also weak, and the MACD does not provide precise signals. However, the price remains above the 20-period Simple Moving Average (SMA). As long as it stays above 1.0950, the odds favor a break of 1.1000. A slide below that area would weaken the Euro in the short term, exposing the next support at 1.0910.
View Live Chart for the EUR/USD
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Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
