EUR/USD retreats from 1.1300 down to 1.1270s amid mildly improved market sentiment

On Monday, the EUR/USD grinds lower during the New York session, trading at 1.12880 at the time of writing. Since the beginning of the Asian session, the shared currency edged lower as market sentiment improved on the back of positive news from South African health authorities. The greenback advances against most G8 currencies in the FX markets, except for the AUD and the CAD.

Friday’s price action was exacerbated by COVID-19 omicron news in conditions of thin liquidity after the observance of Thanksgiving. Furthermore, World Health Organization (WHO) authorities sounded the alarm with some countries banning flights from South Africa and some African countries. That would last unless scientists could prove that although highly transmissible, the new variant is not as dangerous as the delta. Until that news arrives, market participants will remain cautious, waiting for further information.

That said, the USD weakened across the board, with the US Dollar Index closing near the psychological 96.00, as investors scaled back bets that the Federal Reserve would hike rates three times in 2022, as money market futures have priced in just two increases, pushing the third one until 2023. That is due to assessing what the new coronavirus variant impact would be on the global economy.

Meanwhile, on Monday, the USD recovered some ground against the shared currency. Early in the Asian session, the EUR/USD broke below the 1.1300 figure, printing a daily low nearby the 50-hour simple moving average (HSMA) at 1.1258, though in the last couple of hours jumped above the 50 and the 200-HSMA, at current levels.

On the economic docket, the Eurozone unveiled the HICOP for Germany for November, which rose by 6%, higher than the 5.4% estimated. Meanwhile, across the pond, the US Pending Home Sales for October on a monthly basis increased by 7.5%, higher than the 1% expected.

EUR/USD Price Forecast: Technical outlook    

In the 1-hour chart, the EUR/USD remained subdued, failing to gain traction further to the downside. Also, the low-yield status of the EUR helps it attain a “safe-haven” status, despite usually not being one of them, like the JPY, the CHF, and the greenback. That put a lid on the downward move, near the 50 and the 200-hour simple moving averages (HSMA’s), which acted as dynamic support.

However, to resume the downward bias observed in a higher time frame like the daily chart, USD bulls would need to push the pair below the 200-HSMA.
In that outcome, the first support would be the S1 pivot point at 1.1238. A break below the latter would expose the November 26 swing low at 1.1204, followed by the S2 pivot point at 1.1158.

On the other hand, the daily central pivot point at 1.1285 would be the first resistance. A breach above that level would expose crucial supply zones, like the 1.1300 figure, followed by the R1 resistance at 1.1365.