EUR/USD Current Price: 1.2123

  • Treasury Secretary nominee Janet Yellen to boost stimulus, reform taxes.
  • German’s Economic Sentiment improved in January, according to the ZEW survey.
  • EUR/USD bounced from critical Fibonacci support, bullish potential still limited.

The American dollar gave back some of its recent gains as the market’s mood improved, resulting in EUR/USD recovering the 1.2100 threshold and finishing the day near a daily high of 1.2144. The greenback lost momentum during the American afternoon, as Wall Street was unable to hold on to early gains, although indexes remained in the green. US Treasury yields, however, edged marginally lower with the yield on the benchmark 10-year note down to 1.08%.

On the data front, German published inflation figures, which was confirmed at -0.3% YoY in December,  while the ZEW Survey showed that the Economic Sentiment improved to 61.8 in January from 55 in the previous month. The index for the EU came in at 58.3, improving from 54.4.

The US didn’t publish macroeconomic data, but Janet Yellen, the upcoming Treasury Secretary under Biden’s presidency, testified before the senate. Her prepared remarks have been released on Monday, limiting the impact of her words on financial markets. Nevertheless, she pledged to boost stimulus by saying that is time to go “big” on spending while adding that she is prepared to use the full array of tools to address China’s abusive and unfair practices. She also said that she wants to reverse some of the incentives to offshoring, weighing on indexes.

The EU will publish the final version of its December inflation figures, while the US has a light calendar. However, is the Presidential Inauguration, and political turmoil could spur risk-aversion.

EUR/USD short-term technical outlook

The EUR/USD pair has recovered from the 38.2% retracement of its November/January rally around 1.2060, but its bullish potential remains limited. The 4-hour chart shows that the pair is developing a few pips above a bearish 20 SMA, while well below the larger ones. Technical indicators are in neutral levels, the RSI flat, reflecting limited buying interest. The 23.6% retracement of the mentioned advance provides resistance at 1.2170, with bulls better positioned with the pair above it.

Support levels: 1.2105 1.2060 1.2020

Resistance levels: 1.2170 1.2225 1.2260

View Live Chart for the EUR/USD

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