EUR/USD Price Forecast: Modest advance as thin trading continues

EUR/USD Current price: 1.0452

• ECB Governing Council member Knot commented on potential benefits of Chinese trade.
• The United States will publish some minor macroeconomic figures after the opening.
• EUR/USD advances in thin trading conditions, faces resistance at around 1.0470.

The EUR/USD pair posts a modest intraday advance on Monday, reverting an early slide towards the 1.0400 region. The US Dollar (USD) found near-term demand during Asian trading hours, albeit persistent thin holiday trading limited directional moves across financial boards. The USD, however, shed ground in European trading hours, helping EUR/USD recover towards the current 1.0450 price zone.

Meanwhile, European Central Bank (ECB) Governing Council member Klaas Knot hit the wires and noted that “there is a chance that the Chinese will start offering their goods in Europe at lower and lower prices” if the upcoming United States (US) administration goes ahead with imposing fresh tariffs on Chinese products.

The macroeconomic calendar offered no relevant data, although Spain reported that the Harmonized Index of Consumer Prices (HICP) unexpectedly rose to 2.8% on a yearly basis in December, according to preliminary estimates.

The US will release, after Wall Street’s opening, the December Chicago Purchasing Managers’ Index and the Dallas Fed Manufacturing Business Index for the same month. The country will also publish November Pending Home Sales. Ahead of the opening, US indexes trade with a soft tone, although holding within familiar levels and above Friday’s lows.

EUR/USD short-term technical outlook

From a technical point of view, the EUR/USD pair is up for a third consecutive day yet still at risk of falling. In the daily chart, the pair keeps developing below all its moving averages, with the 20 Simple Moving Average (SMA) providing dynamic resistance at around 1.0470. Technical indicators, in the meantime, have posted modest advances but remain within negative levels and far from suggesting a relevant leg north.

In the near term, and according to the 4-hour chart, on the contrary, technical readings suggest the pair may add some pips. A mildly bullish 20 SMA provides intraday support around the 1.0400 threshold, although the 100 and 200 SMAs maintain their bearish slopes above the current level. Finally, technical indicators extend their advances within positive levels, reflecting near-term buying interest. The upward momentum, however, remains limited.

Support levels: 1.0400 1.0370 1.0330  

Resistance levels: 1.0470 1.0510 1.0550