EUR/USD rally cools, pair consolidates in 1.1450 area as traders assess whether dollar long-squeeze is done

  • EUR/USD buying hit overdrive on Wednesday, but the pace of gains has been more measured on Thursday.
  • The pair is now consolidating in the 1.1450 area as traders assess whether the recent dollar long-squeeze is over.

After EUR/USD buying hit overdrive on Wednesday as the pair shot back above the 1.1400 level, the pace of gains has been more measured on Thursday. While the pair continues to trade with modest gains of about 0.1% on the day just above 1.1450, it has backed off from earlier highs in the 1.1480 area. But EUR/USD is still up about 0.8% on the week, with the euro benefitting in tandem with the rest of its G10 peers, on a recent surge in US dollar weakness.

Dollar weakness this week has come despite Fed Chair Jerome Powell on Tuesday (and other Fed members this week) endorsing the outlook for multiple rate hikes and likely quantitative tightening in 2022. It has come despite Consumer Price Inflation data on Wednesday showing price pressures at a fresh multi-decade high at 7.0% YoY and Producer Price Inflation data on Thursday hitting a new series high at 9.7% YoY. The non-intuitive move lower in the buck that has so benefitted EUR/USD this week appears to have been a function of profit-taking/a long squeeze, as well as technical factors.

Note that, according to the US CFTC, International Monetary Market speculators finished 2021 with a net long position in the US dollar that was near the largest is had been in two years. Crowded long-positioning seems to have taken a battering this week, thanks in part to technical buying in EUR/USD after it broke above the key 1.1380 resistance area (the late November/December highs) on Wednesday. Note that during the month of December, EUR/USD had formed an ascending triangle, which often portends a bullish breakout.

The technical play from here would often be to wait for a retracement back to the original level of resistance (at 1.1380) and rebuild longs in the hope the level will now provide solid support. But with the case strengthening for a stronger dollar this year as the Fed becomes more hawkish and inflationary conditions remain hot, the fundamentals may be pointing towards a drop back towards November/December lows in the 1.1200 area over the course of Q1.


Today last price 1.1452
Today Daily Change 0.0002
Today Daily Change % 0.02
Today daily open 1.145
Daily SMA20 1.1325
Daily SMA50 1.1339
Daily SMA100 1.1513
Daily SMA200 1.1736
Previous Daily High 1.1453
Previous Daily Low 1.1355
Previous Weekly High 1.1379
Previous Weekly Low 1.1272
Previous Monthly High 1.1386
Previous Monthly Low 1.1222
Daily Fibonacci 38.2% 1.1415
Daily Fibonacci 61.8% 1.1392
Daily Pivot Point S1 1.1385
Daily Pivot Point S2 1.1321
Daily Pivot Point S3 1.1287
Daily Pivot Point R1 1.1484
Daily Pivot Point R2 1.1517
Daily Pivot Point R3 1.1582



Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD extends slide to 1.1300 as dollar gathers strength

EUR/USD continues to stretch lower and tests 1.1300 handle ahead of the American session. The greenback outperforms its major rivals as safe-haven flows dominate the financial markets. Investors await Markit's preliminary US Manufacturing and Services PMI data. 


GBP/USD tests 1.3500 on risk aversion, weak UK data

GBP/USD continues to edge lower and trades at its weakest level in more than two weeks near 1.3500. The data from the UK revealed that the private sector's business activity expanded at a softer pace in early January than it did in December.


Gold holds near $1840 ahead of key Fed meeting as geopolitical worries rise

Gold is holding near $1840 despite the stronger USD on a heightened safe-haven bid amid geopolitical concerns. What is expected to be a very hawkish Fed meeting will test gold’s resilience this week.

Gold News

Crypto carnage continues to unfold

Bitcoin price has witnessed a massive crash over the past week, undoing the gains seen since July 25. Ethereum, Ripple and other altcoins have followed suit, experiencing an even worse crash. 

Read more

Nvidia extends losses after Bitcoin’s overnight flash crash

NVDA investors are getting used to seeing the colour red after a year in 2021 when all they saw was green. On Friday, shares of NVDA fell by 3.21%.

Read more