- EUR/USD has found support near 1.1300 early Friday.
- Technical outlook suggests that recovery attempts are likely to remain as corrections.
- Euro could find demand in case safe-haven flows continue to dominate the markets.
EUR/USD has declined toward 1.1300 during the Asian trading hours on Friday but managed to erase its daily losses. The pair continues to trade near the lower end of its weekly range and technical signs suggest that recovery attempts are likely to remain limited in the short term.
On Thursday, the December Meeting Accounts of the European Central Bank (ECB) showed there was a difference of opinion among policymakers regarding the inflation outlook. The publication revealed that the "higher for longer" inflation scenario couldn't be ruled out and some members of the Governing Council wanted the ECB to communicate clearly that it's ready to act if price pressures proved to be more persistent. On a dovish note, concerns were also expressed about any premature scaling back of monetary stimulus and asset purchases.
The shared currency failed to capitalize on the ECB's statement and the greenback preserved its strength in the risk-averse market environment, forcing EUR/USD to close in the negative territory on Thursday.
Safe-haven flows continue to dominate the financial markets in the early European session on Friday but the sharp decline witnessed in the US Treasury bond yields seems to be causing the dollar to stay on the back foot. The euro could outperform its risk-sensitive rivals, such as the AUD and the NZD, ahead of the weekend and stay resilient against the dollar.
There won't be any high-tier data releases in the remainder of the day and investors should remain focused on risk perception.
EUR/USD Technical Analysis
EUR/USD has been posting lower highs on the four-hour chart since the beginning of the week, suggesting that recovery attempts remain technical in nature. Additionally, the 20-period SMA crossed below the 100-period SMA, pointing to a bearish shift in the near term. Finally, the Relative Strength Index (RSI) stays below 50, confirming the view that buyers remain uninterested for the time being.
The 200-period SMA forms the first resistance at 1.1320. In case the pair stays below that level, 1.1300 (psychological level) aligns as first support before 1.1270.
On the upside, the descending trend line acts as a static hurdle at 1.1340 ahead of 1.1350, (00-period SMA and the Fibonacci 61.8% retracement of the latest uptrend) and 1.1380 (Fibonacci 50% retracement).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD retreats to 1.0750, looks to post small weekly gains
EUR/USD lost its traction and declined to the 1.0750 area in the American session on Friday. In the absence of high-tier data releases, week-end flows seem to be impacting the pair's action heading into the weekend.
GBP/USD holds above 1.2550 ahead of the weekend
GBP/USD keeps its footing on Friday and trades modestly higher on the day above 1.2550 following Thursday's rally. Ahead of next week's all-important US inflation data and Fed policy announcements, modest US Dollar weakness allows the pair to stay in positive territory.
Gold struggles to find direction, holds steady near $1,960
Gold price struggles to make a decisive move in either direction on Friday in the absence of high-impact data releases. The benchmark 10-year US Treasury bond yield stays relatively calm above 3.7% following Thursday's slide, limiting XAU/USD's action.
Weekly Roundup: Binance US halts fiat services, Coinbase does business as usual, XRP hits key milestone
The US financial regulator, the Securities and Exchange Commission’s (SEC) clampdown on exchange negatively influenced the crypto market and assets throughout the week. The lawsuits against Binance and Coinbase resulted in several challenges for the platforms’ users.
The Week Ahead - FOMC, ECB and Bank of Japan, US CPI, China retail sales and Tesco results
A busy week is ahead, including meetings from the Federal Reserve, the European Central Bank, and the Bank of Japan. Data to be released includes US CPI and China retail sales. Tesco will also release results.