EUR/USD Forecast: Sentiment pressures the dollar

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.2130

US Treasury yields and equities advance ahead of Yellen’s testimony.
The German ZEW survey showed that Economic Sentiment improved in January.
EUR/USD is neutral-to-bullish in the near-term, better chances above 1.2170.

The EUR/USD pair recovered on a better market’s mood, hitting a daily high of 1.2137 and trading nearby ahead of Wall Street’s opening. The dollar weakened as stocks recovered ground and US Treasury yields advanced. Still, there are no fireworks across financial markets, as investors await for Janet Yellen. The former Federal Reserve’s head has been nominated as Treasury Secretary by Joe Biden and will speak before the Senate Finance Committee.

Data coming from Europe was generally encouraging, although still reflecting the effects of the pandemic in economic progress. German inflation was confirmed at -0.3% YoY in December, while the ZEW Survey showed that the Economic Sentiment improved to 61.8 in January from 55 in the previous month. The index for the EU came in at 58.3, improving from 54.4. The US has little to offer, with the focus on Yellen speech.

EUR/USD short-term technical outlook

The EUR/USD pair has recovered from around the 38.2% retracement of its November/January rally at 1.2062 but remains below the next Fibonacci level at 1.2170. Bulls will likely retake control on a break above this last. In the near-term, and according to the 4-hour chart, the bullish potential is limited. The pair has recovered above its 20 SMA but remains below the larger ones, while technical indicators head higher, but within neutral levels.

Support levels: 1.2105 1.2060 1.2020

Resistance levels: 1.2170 1.2225 1.2260

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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