Daily Price Outlook
The EUR/USD pair closed at $1.1341 after hitting a high of $1.1358 and a low of $1.1318. The EUR/USD reversed course and surged on Wednesday after breaking its 3-day bearish streak. The reversal could be attributed to the declining US dollar prices on Wednesday. The US Dollar Index, which measures the greenback value against half a dozen currencies of major economies, fell to 95.49 levels. The US dollar was facing pressure ahead of the US Federal Reserve monetary policy meeting next week. Investors are expecting any information about the rate hike timing in the upcoming meetings on January 25 and 26.
On the data front, at 12:00 GMT, the German Final CPI remained flat at 0.5%, as expected. At 14:00 GMT, the current account also surged to 23.6B against the projected 20.3B, supporting the euro and pushing EUR/USD higher. On the other hand, from the US side, at 02:00 GMT, the TIC Long-Term Purchases rose to 137.4B against the anticipated 37.6B and supported the US dollar. At 18:30 GMT, the Building Permits rose to 1.87M against the forecasted 1.71M and supported the US dollar. The Housing Starts also surged to 1.70M against the estimated 1.65M and supported the US dollar. The favourable data from the US kept the gains in EUR/USD pair limited for the session.
The gain in the EUR/USD pair was also caped by the prevailing risk-off market sentiment, driven by the increased tensions surrounding Ukraine. The White House has warned Russia that it was ready to attack Ukraine as its troops have been built on the borderline. The US and European countries and Ukraine showed concerns over the potential threat of attack, which Russia has denied lately despite having troops on the borders.
These geopolitical tensions added to the safe-haven appeal and weighed on risk-related currencies like the euro, which capped further gains in the EUR/USD pair. Meanwhile, market participants anticipated the release of the ECB meeting accounts, which would provide hints on how to reduce stimulus and rate hikes.
EUR/USD Intraday Technical Levels
Daily Technical Levels
Pivot Point: 1.1339
EUR/USD – Technical Outlook
The EUR/USD appears to have gained support at 1.1320, in which the four-hour chart’s 200-period SMA is positioned. However, the latest recovery seems to be a technical corrective rather than a reversal, with the Relative Strength Index (RSI) still below 40. If a four-hour candle closes below 1.1320, further losses are possible toward 1.1300 (psychological level) and 1.1270. Therefore, the support level of 1.1300 is in highlights.
On the upside, the initial barrier remains at 1.1350 (100-period SMA, Fibonacci 61.8 percent retracement), followed by 1.1380 (Fibonacci 50 percent retracement). The break above 1.1380 exposes the EUR/USD towards 1.1400. (Fibonacci 38.2 percent retracement).