EUR/USD Forecast: Short-term bullish, but upside potential limited

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1134

US to remove currency manipulator tag on China ahead of Wednesday’s ceremony.
US annual final December inflation seen revised up to 2.3% from 2.1%.
EUR/USD hovering near its daily high ahead of the Asian opening.

A mildly positive mood has dominated the financial scene on Monday, weighing on those considered safe-haven assets. The EUR/USD pair, however, was unable to catch a bid, spending the day in a well-limited range. It hit a daily high of 1.1146 during the American session, boosted by news indicating that the US would remove the tag of “currency manipulator” on China, before both countries sign phase one of the trade deal later this week.

The absence of macroeconomic releases limited further the intraday range for the pair. This Tuesday, the US will release the final version of December CPI, with the annual inflation seen at 2.3%. Despite the risk-on sentiment, the shared currency is having a hard time to extend gains against the greenback, somehow suggesting that the market is waiting for a reason to resume dollar’s buying.

EUR/USD short-term technical outlook

The EUR/USD pair is currently trading at around 1.1135, just above a strong Fibonacci level. It’s technically bullish in the short-term and according to the 4-hour chart, as technical indicators hold within positive levels, and at fresh 1-week highs, although losing upward strength. The price, in the meantime, is struggling with a flat 100 SMA, with all moving averages lacking directional strength. The bullish potential, however, seems limited, as sellers have been adding on approaches to the 1.1200 level. The pair would need to run past 1.1240 to become more attractive to bulls, yet the fundamental scenario doesn’t favor such advance.

Support levels: 1.1090 1.1065 1.1020

Resistance levels: 1.1135 1.1160 1.1200

View Live Chart for the EUR/USD

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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