EUR/USD Forecast: US Dollar buyers keep fighting to retain control

Valeria Bednarik FXStreet

EUR/USD Current price: 1.0948

United States markets will remain closed amid the Martin Luther King Day holiday.
European data disappointed, limiting the bullish potential of the Euro.
EUR/USD is neutral-to-bearish in the near term, likely to continue ranging.

The EUR/USD pair trades uneventfully around its daily opening on Monday, with a scarce macroeconomic calendar and a holiday in the United States (US) exacerbating range trading. Investors take clues out of stocks’ behavior, with European indexes currently trading in the red. Equities started the day with a positive tone amid persistent bets the US Federal Reserve (Fed) will go on with rate cuts this year, potentially triggering the first one in March.

However, stock markets lost momentum and European indexes post modest losses at the time. Meanwhile, the US celebrates Martin Luther King Day. That means there will be no activity on Wall Street or in Treasuries.

Data-wise, Germany published the December Wholesale Price Index, which slid 0.6% MoM. The Eurozone Trade Balance posted a surplus of €14.8 billion in November, while Industrial Production in the same month declined 6.8% YoY, much worse than anticipated.

EUR/USD short-term technical outlook

The EUR/USD pair hovers around the 1.0950 level without clear directional strength. The pair has been range trading for over a week now, and the daily chart shows that the risk skews to the downside. The 20 Simple Moving Average (SMA) turned flat, providing dynamic resistance around 1.0980. The SMA has attracted sellers pretty much since the month started. Meanwhile, the 100 and 200 SMAs lack directional strength far below the current level, reflecting the absence of directional conviction. Finally, technical indicators develop within negative levels but head nowhere.

In the near term, and according to the 4-hour chart, EUR/USD is neutral-to-bearish. It has been trading between directionless 100 and 200 SMAs for over two weeks, with a flat 20 SMA in between. Technical indicators stand below their midlines without enough strength to confirm another leg south.

Support levels: 1.0920 1.0875 1.0830

Resistance levels: 1.0980 1.1025 1.1060

View Live Chart for 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.

AUD/USD bulls regain control above 0.6950 amid USD retreat

AUD/USD regains traction and extends the previous day's bounce from the weekly low, aiming for 0.7000 in Asia on Friday. The overnight pullback in US bond yields keeps the US Dollar below an 18-month high, which in turn offers some support to the pair. Meanwhile, hawkish RBA expectations also keep the major underpinned.

USD/JPY holds gains near 158.00 after Japan's weak Household Spending data

USD/JPY clings to gains around 158.00 after data showed on Friday that Japan's Household Spending fell for the ninth straight month, undermining the Japanese Yen. Meanwhile, the US Dollar remains depressed as the overnight fall in US bond yields counters a hawkish Fed and geopolitical uncertainties, could cap any downside in the pair.

Gold remains range-bound below $4,200

Gold has given up some ground after an initial bullish attempt to reach weekly highs, returning to below the $4,200 mark per troy ounce on Friday. The US Dollar’s strong upside momentum, combined with rising US Treasury yields across the curve, seems to keep further gains in the yellow metal under scrutiny.

Week ahead: US CPI, France’s budget crisis and Q3 earnings to set the market tone

The US dollar held relatively strong this week, despite the disappointing US jobs report on October 2, which further decreased the probability of a back-to-back rate hike by the Fed at the upcoming gathering on October 28.

CFTC Report: Euro and Aussie shorts expand amid diverging signals

The week in one sentence: Euro and Australian Dollar shorts deepened in the week to October 6, while Yen longs rebuilt. In addition, Coffee buying continued, and Gold exposure remained elevated despite another price decline. Speculators turned more negative on the Euro, increasing the net exposure to around 99.3K contracts.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?