EUR/USD Price Forecast: Buyers maintain the pressure ahead of key central bank meetings

EUR/USD Current price: 1.0524

• The US Dollar falls despite risk aversion dominating financial markets.
• The German IFO survey showed an upbeat Business Climate in January.
• EUR/USD bullish momentum set to continue, traders aim for 1.0600.

The US Dollar (USD) is under strong selling pressure on Monday, particularly against high-yielding rivals. The EUR/USD pair trades at fresh multi-week highs in the 1.0520 region, helped by encouraging German data. The country released the January IFO survey, which showed that the Business Climate improved to 85.1 from 84.7 in December, beating the expected 84.6. The assessment of the current situation and expectations also improved by more than anticipated, printing at 86.1 and 84.2, respectively.

Other than that, the USD is weak despite a risk-averse environment, with Wall Street’s futures sharply lower. Finally, US Treasury bond yields are also down, with the 10-year note offering 4.51%, roughly 10 basis points (bps) down from last Friday.

Meanwhile, European Central Bank (ECB) President Christine Latade spoke at a Hungarian central bank conference. She did not refer to monetary policy but expressed concerns about central banks’ independence, saying it is being questioned in “several” parts of the world.”

The ECB and the Federal Reserve (Fed) will announce their decisions on monetary policy this week, with the first seen trimming rates yet the Fed holding its fire.

Data-wise, the American session will bring the December Chicago Fed National Activity Index and New Home Sales for the same month.

EUR/USD short-term technical outlook

The daily chart for the EUR/USD pair shows buyers are in full control and could push the pair further up. EUR/USD keeps advancing beyond a now flat 20 Simple Moving Average (SMA), currently consolidating at around 1.0345. Technical indicators, in the meantime, head north within positive levels without signs of upward exhaustion. Finally, a bearish 100 SMA stands at around 1.0685, providing relevant resistance should the pair extend gains.

The upward momentum is firmer in the near term, as the 4-hour chart shows technical indicators heading firmly higher within positive levels, still below overbought readings. Finally, a bullish 20 SMA extends its advance beyond directionless 100 and 200 SMAs while providing support at around 1.0445, reinforcing the relevance of the area.

Support levels: 1.0445 1.0400 1.0355

Resistance levels: 1.0520 1.0565 1.0610