EUR/USD slides below 1.1240 amid broad US dollar strength, after Biden nominates Powell

The EUR/USD continue heading lower, as the New York session wanes and the Asian session begins, is trading at 1.1239, around the new year-to-date lows, at the time of writing.

US President Biden nominates Jerome Powell as the Federal Reserve Chairman

The New York session witnessed the renomination of Jerome Powell as Fed Chairman for another four years. Also, Fed Governor Lael Brainard, the other candidate to become the new Fed Chair, was elevated as Vice-Chairwoman, in substitution of current Vice-Chair Richard Clarida.

The shared currency immediately fell 40 pips, down to 1.1237, once the announcement was known, 30 minutes before Wall Street opened, happening amid a light US economic docket.

On Monday in the overnight session, COVID-19 infections rising in Austria, Germany, and Eastern Europe, alongside Eurozone macroeconomic data, spurred demand for the greenback. In coronavirus-related info, the German Chancellor Angela Merkel said that the situation in Germany is worse than anything they have seen so far, per Reuters.

Meanwhile, the Eurozone economic docket featured the Consumer Confidence and some ECB speakers. Data-wise, the Consumer Confidence fell to -6.8, more than the -5.5 foreseen by analysts. The data reflect the uptick in Covid-19 infections happening in the last weeks. The final reading is expected to show further deterioration as it will reflect the reimposing of restrictions.

In the meantime, some ECB speakers crossed the wires. The head of the Latvian central bank and ECB Governing Council member Martins Kazaks said that as long as price pressures are transitory and supply-side shocks, monetary policy should look through it. In the same posture, the Bank of France Chief, Francois Villeroy, said that the current “hump” in inflation is transitory. The central bank should be patient regarding tightening monetary policy conditions.

Therefore, as long as the economic docket remains light on both sides of the Atlantic, the dynamics lie in the US Dollar and market sentiment. 

EUR/USD Price Forecast: Technical outlook

The single currency is on a downward free-fall. The pair has a bearish bias, with the daily moving averages (DMA’s) located well above the spot price, with the shorter time-frame ones, below the longer ones, all of them with a downward slope. Further, the Relative Strength Index (RSI), a momentum indicator at 26, flattish, in oversold conditions, suggests the pair could potentially reach a bottom.

In the outcome of the aforementioned, the first resistance to overcome would be the 1.1300. A break of the latter would expose the November 18 high at 1.1373, immediately followed by the psychological 1.1400.

Contrarily, the 1.1200 figure would be the first support if the euro keeps falling. The next demand area would be June 19, 2020, low at 1.1168, followed by 1.1100.