EUR/USD Forecast: Tepid advance, despite growing optimism

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1313

EU Markit December Services PMI downwardly revised and flirted with contraction.
The US ADP survey on private job creation posted a whopping 807K for December.
EUR/USD holds within familiar levels, buying interest remains limited.

The EUR/USD pair is advancing within range on Wednesday, trading above the 1.1300 figure. The pair fell at the beginning of the day amid a sour prevaling mood but then trimmed Asian session losses in the following session, as European stocks held in the green, reflecting a better perception of the risk-related sentiment. Meanwhile, US government bond yields stabilized below their recent highs. The yield on the 10-year Treasury note is currently around 1.65%

On the data front, Markit published the final versions of the December Services PMIs for the EU, most of which suffered downward revisions. The German index printed at 48.7, slightly better than anticipated, although indicating contraction. The final EU figure came down to 53.1.

Across the pond, the US released the December ADP survey on private job creation, posting a whopping 807K, and more than doubling the 400K expected. Investors are now waiting for the December Federal Reserve meeting Minutes. At that meeting policymakers decided to double the pace of the monthly bond-buying taper and hinted at three rate hikes in 2022.

EUR/USD short-term technical outlook

The EUR/USD pair showed no reaction to the upbeat US employment-related report, holding a few pips above the 1.1300 level. Elsewhere, the greenback remains under pressure amid firming up US stocks’ futures.

Technical readings in the daily chart suggest that risk remains skewed to the downside, as the pair cannot advance beyond its 20 SMA, while technical indicators remain just below their midlines, although lacking directional strength.

The 4-hour chart shows that EUR/USD keeps seesawing around a directionless 20 SMA, meeting sellers at around the 20 SMA, which stands at the upper end of the range. In the meantime, technical indicators remain within negative levels, the Momentum is advancing and the RSI is losing upward strength, indicating limited buying interest.

Support levels: 1.1260 1.1220 1.1185

Resistance levels: 1.1340 1.1385 1.1410

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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