- EUR/USD returns to the negative territory in the 1.2100 area.
- EMU’s final December headline CPI dropped 0.3% on a yearly basis.
- Attention remains on Inauguration Day and probable announcements by Biden.
EUR/USD trades with losses in the middle of the daily range around the 1.2100 region on Wednesday.
EUR/USD looks to USD, Biden
EUR/USD failed to extend the weekly recovery further north of the 1.2160 region, motivating sellers to return to the market and drag spot back to sub-1.2100 levels pari passu with the rebound in the greenback.
In the meantime, all the attention will be on the Inauguration Day and the speech by Joe Biden after he becomes the 46th US President. Market participants expect Biden to address the ongoing trade conflict with China as well as the nuclear agreement with Iran, further stimulus and extra announcements regarding green energy among others.
Earlier in the calendar, final December inflation figures in the euro area showed the CPI contracted 0.3% YoY and increased 0.2% YoY when comes to core prices. In the US, the NAHB Index eased to 83 in January (from 86) and the API’s report is due later.
What to look for around EUR
The leg lower in EUR/USD seems to have met decent contention in the mid-1.2000s for the time being. Despite the recent corrective downside, the outlook for EUR/USD remains constructive and appears supported by prospects of a strong recovery in the region (and abroad), which is in turn underpinned by extra fiscal stimulus by the Fed and the ECB. In addition, real interest rates continue to favour the euro area vs. the US, which is also another factor supporting the EUR along with the huge, long positioning in the speculative community.
EUR/USD levels to watch
At the moment, the pair is down 0.16% at 1.2109 and faces the next support at 1.2054 (55-day SMA) seconded by 1.2053 (2021 low Jan.18) and finally 1.1976 (50% Fibo of the November-January rally). On the other hand, a break above 1.2173 (23.6% Fibo of the November-January rally) would target 1.2349 (2021 high Jan.6) en route to 1.2413 (monthly high Apr.17 2018).
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