EUR/USD Forecast: trims early losses, Biden speech eyed

The EUR/USD managed to cut losses during the New York session.
Short-term technical picture turns slightly negative with 1.2100 as main support.

Valeria Bednarik FXStreet

The EUR/USD pair stretched lower on Thursday and hit a fresh 1-month low at 1.2110 at the beginning of the American session, although it managed to cut losses afterwards and climbed back to the 1.2150 area. The dollar strengthened broadly amid higher US yields on prospects that President-elect Joe Biden is set to announce a covid relief plan, which is reported to amount around $2 trillion, at his speech at the beginning of the Asian session. Meanwhile, Federal Reserve Chairman, Jerome Powell, sounded somewhat optimistic about the economic recovery. Still, Powell noted time to raise interest rates is no time soon and that the central bank would not alter its monetary policy for the foreseeable future, which however, came as little surprise and had limited impact on the greenback.

On the data front, US Initial Jobless claims rose to 965K last week, the highest level since August and above the 795K expected. The ECB Meeting Accounts were published on the other side of the pond, which showed the Governing Council is concerned about the euro’s exchange rate and its potential negative impact on the inflation outlook. On Friday, data includes Eurozone trade balance figures. In the US it will be a busy day, with Producer Price Index, Retail Sales, Industrial Production and Consumer Confidence numbers due.

EUR/USD short-term technical outlook

In the 4-hour chart, the technical picture looks slightly bearish for the EUR/USD after today’s fall. Even though the RSI and Momentum indicators are hovering in positive territory, the price trades below its main moving averages, while the 50 and 100 SMAs have completed a bearish cross at the same time that the 20 and 200 SMAs plotted the same pattern. The EUR/USD slid briefly below the 1.2130 significant support, but it managed to rebound back above. A decisive breakdown of this level could push the pair to the 1.2100 psychological level. On the other hand, the pair needs to regain the 1.2170-80 zone to ease the immediate pressure.

Support levels: 1.2130 1.2100 1.2080

Resistance levels: 1.2170 1.2220 1.2285

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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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