EUR/USD Forecast: Several key supports limit euro's downside
- EUR/USD seems to have steadied above 1.1300 at the beginning of the week.
- The pair is likely to fluctuate between key technical levels.
- There won't be any high-impact macroeconomic data releases ahead of New Year.
Following a decisive rebound in the first half of the previous week, EUR/USD has gone into a consolidation phase above 1.1300 and the lack of fundamental drivers is likely to force the pair to extend its sideways grind. The pair seems to have settled above key technical support levels, suggesting that sellers remain on the sidelines for the time being.
In the absence of high-tier macroeconomic data releases, last week's recovery may have been fueled by profit-taking ahead of the Christmas break. Although a similar action on the back of year-end flows could be expected toward the second half of the week, the next decisive move is unlikely to come until the first week of 2022.
Later in the session, the Federal Reserve Bank of Dallas will release the Texas Manufacturing Survey for December but market participants should pay little to no attention to this publication.
In the meantime, US stocks futures are trading flat in the early trading hours of the European session on Monday. The S&P 500 Index gained more than 2% last week and registered its highest daily close on record on December 23. A deep correction in Wall Street's main indexes could help the greenback stay resilient against its rivals in the second half of the day.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart is moving sideways near 50, punctuating the pair's indecisiveness in the near term.
On the downside, a key support area seems to have formed near 1.1300, where the 200-period SMA, 100-period SMA and the 50-period SMA meet. In case a four-hour candle closes below that support, additional losses toward 1.1270 (static level) could be witnessed.
On the flip side, 1.1340 (static level) aligns as first resistance before 1.1360 (post-ECB high on December 16).
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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
