Daily Price Outlook
The EUR/USD closed at $1.1453 after hitting a high of $1.1482 and a low of $1.1435. The EUR/USD surged for the third consecutive session on Thursday and reached its highest since November 11th, amid the declining price of the US dollar. The greenback was weak across the board after the release of the disappointing PPI report. Furthermore, the comments from Fed governor Lael Brainard also suggested that the central bank was ready to increase interest rates this year after it terminated asset purchases in March. These comments should have supported the US dollar, but as markets had already priced in the potential rate hike, the greenback remained under pressure and, hence, EUR/USD moved higher for the day.
The US Dollar Index, which measures the greenback’s value against the basket of half a dozen currencies from major economies, fell below the 95 level at 94.66, which added strength to the riskier currency pair EUR/USD. The US Treasury yields were also lower on Thursday at 1.69%, which affected the dollar and ultimately pushed the EUR/USD pair higher.
At 14:00 GMT, Italian industrial production surged to 1.9%, against the forecasted 0.4%, and supported the single currency euro, adding gains in EUR/USD. From the US side, at 00:00 GMT, the Federal Budget Balance fell to-21.3B against the projected 5.8B and supported the US dollar. At 18:30 GMT, the PPI also declined to 0.2%, against the forecasted 0.4% and weighed on the US dollar. The core PPI remained flat with projections of 0.5%. Unemployment claims increased to 230K from an estimated 199K, weighing on the US dollar. The US data remained unfavourable on Thursday and supported the upward momentum of EUR/USD.
Meanwhile, European Medicines Agency (EMA) experts have stated that the spread of the Omicron variant is pushing coronavirus towards becoming an endemic disease that humanity can live with, though it remains a pandemic for the time being. Spain has decided to treat COVID-19 as the flu and has suggested its people live with it. However, in response to this, the World Health Organization (WHO) has said that it was too soon to treat coronavirus like flu as Omicron was spreading fast worldwide. The WHO has said that the omicron variant of coronavirus was on track to infect more than half of Europeans, but it should not yet be seen as a flu-like endemic illness. WHO reported that Europe saw more than 7 million new cases in the first week of 2022.
EUR/USD Intraday Technical Levels
Daily Technical Levels
Pivot Point: 1.1457
EUR/USD – Technical Outlook
Following US inflation numbers, the EUR/USD pair advances past the stated high as the greenback weakens across the board. The pair has advanced beyond 1.1385, the 38.2 percent retracement of the 1.1691/1.1185 drop, and the December monthly high, implying that a positive continuation could be extended in the coming sessions if it can sustain gains at this level.
The pair is climbing over a modestly bullish 20 SMA daily, while technical indicators are gathering strength. The 100 SMA maintains its bearish slope near the 61.8 percent retracement of the previous decline at 1.1500, which might be a bullish target.
The 4-hour chart shows that the pair defied 1.1400 while developing well above bullish moving averages, indicating a strong bullish potential. Meanwhile, technical indicators have risen sharply inside positive ranges, approaching overbought territory. All the best!