|

EUR/USD Price Forecast: Sellers willing to pressure the 1.0400 mark

EUR/USD Current price: 1.0425

  • The Federal Open Market Committee will publish the Minutes of the January meeting.
  • Geopolitical uncertainty surrounding the Russia-Ukraine war undermines the mood.
  • The EUR/USD pair retains the soft tone, near-term risk skews to the downside.

The EUR/USD pair eases for a third consecutive day but trades above the 1.0400 threshold, grinding lower amid a worsening market mood. The sentiment was upbeat at the end of the American session on Tuesday, with the S&P500 hitting a fresh all-time high amid a tech rally. Gains continued in early Asia, yet geopolitical concerns pushed indexes into the red. European stocks and United States (US) futures follow the same route.

Market players are keeping an eye on Russia-Ukraine-United States developments. The war between the two Eastern European nations continues and the United States approached Russia to restore their relationship and seek peace between the latter and Ukraine. Hopes seesawed among investors amid the absence of Ukrainian involvement in talks.

Meanwhile, European Central Bank (ECB) member of the Executive Board Isabel Schnabel hit the wires and offered some interesting hints on the ECB’s future moves. On the one hand, Schnabel said that monetary restrictions have come down significantly, up to a point where policymakers can no longer say with confidence that monetary policy is still restrictive. On the other hand, she noted rate increases are out of the table. Bets on additional interest rate cuts eased following her comments, yet not enough to propel the Euro (EUR) higher.

The focus now shifts to the January meeting minutes of the Federal Open Market Committee (FOMC). Back then, officials decided to leave the benchmark interest rate steady at 4.25%-4.50%, a decision that was widely anticipated.

On the one hand, Federal Reserve’s (Fed) Chairman Jerome Powell said that the central bank would need to see “real progress on inflation or some weakness in the labor market before we consider making adjustments.” On the other, policymakers mentioned fiscal uncertainty as an upward risk to inflation. The document may shed some light on what officials plan to do in the upcoming meetings and, hence, affect the US Dollar (USD).

EUR/USD short-term technical outlook

The daily chart for the EUR/USD pair shows the risk of additional slides increased. The pair is approaching a now flat 20 Simple Moving Average (SMA) providing dynamic support at around 1.0410. The 100 SMA, in the meantime, keeps heading firmly south far above the current level, reflecting prevalent selling interest. Finally, technical indicators stand within neutral levels. The Momentum indicator lacks directional strength at around its 100 line, while the Relative Strength Index (RSI) gains downward traction and currently stands at around 52.

The near-term picture is bearish. The EUR/USD pair has extended its slide below a now mildly bearish 20 SMA while approaching a flat 100 SMA, the latter in the 1.0380 price zone. Technical indicators, in the meantime, hover within negative levels and near fresh weekly lows, albeit with limited downward strength.

Support levels: 1.0410 1.0370 1.0320

Resistance levels: 1.0480 1.0515 1.0550  

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to PremiumSign In

Author

Valeria Bednarik

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.

More from Valeria Bednarik
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD falls toward 1.1700 on broad USD recovery

EUR/USD turns south and declines toward 1.1700 on Wednesday. The US Dollar gathers recovery momentum and forces the pair to stay on the back foor, as traders look to USD short-covering ahead of US inflation report on Thursday. However, the downside could be capped by hawkish ECB expectations. 

GBP/USD trades deep in red below 1.3350 after soft UK inflation data

GBP/USD stays under strong selling pressure midweek and trades below 1.3350. The UK annual headline and core CPI rose by 3.2% each, missing estimates of 3.5% and 3.4%, respectively, reaffirming dovish BoE expectations and smashing the Pound Sterling across the board ahead of Thurday's BoE policy announcements. 

Gold clings to moderate daily gains above $4,300

Following Tuesday's volatile action, Gold regains its traction on Wednesday and trades in positive territory above $4,300. While the buildup in the USD recovery momentum caps XAU/USD's upside, the cautious market stance helps the pair hold its ground.

Bitcoin risks deeper correction as ETF outflows mount, derivative traders stay on the sidelines

Bitcoin (BTC) remains under pressure, trading below $87,000 on Wednesday, nearing a key support level. A decisive daily close below this zone could open the door to a deeper correction.

Monetary policy: Three central banks, three decisions, the same caution

While the Fed eased its monetary policy on 10 December for the third consecutive FOMC meeting, without making any guarantees about future action, the BoE, the ECB and the BoJ are holding their respective meetings this week. 

Crypto Today: Bitcoin, Ethereum, XRP slide further as risk-off sentiment deepens

Bitcoin faces extended pressure as institutional investors reduce their risk exposure. Ethereum’s upside capped at $3,000, weighed down by ETF outflows and bearish signals. XRP slides toward November’s support at $1.82 despite mild ETF inflows.