Daily Price Outlook
On Friday, the EUR/USD is trading bearish at 1.1315 level. It’s recovering from Tuesday’s sharp decline. The EUR/USD staged a modest recovery early Wednesday, but the pair may find it really difficult to proceed to edge higher in the near term. The risk-averse market situation will likely restrict the shared currency’s gains, and sellers may seek to maintain control by selling below 1.1320.
The benchmark 10-year US Treasury bond yield rose to 1.89 percent earlier in the day, its highest level in two years, assisting the greenback in retaining its mid-week strength. In the early European session, US stock futures indexes are down between 0.6 percent and 0.9 percent, indicating that safe-haven flows may continue to dominate financial markets in the second half of the day.
Earlier in the day, German data showed that the annual Harmonized Index of Consumer Prices (HCIP), the ECB’s preferred inflation gauge, was 5.7 percent in December. Almost every economist who responded to a recent Reuters poll said they expect the European Central Bank to keep the policy rate unchanged well into next year, even if inflation remains high in 2022. Meanwhile, the 10-year German Government Bond yield has risen into positive territory for the first time since May 2019, providing some temporary support to the common currency.
The US Housing Starts and Building Permits figures from the United States will be examined later in the session for new impetus. Traders will proceed to keep a close watch on US bonds and stock markets.
EUR/USD Intraday Technical Levels
Daily Technical Levels
Pivot Point: 1.1339
EUR/USD – Technical Outlook
The EUR/USD is bouncing-off the psychological support level of 1.1300. However, it appears to have violated the support at 1.1320, and the closing of candles under this level indicates a bearish bias in the EUR/USD pair.
The latest recovery seems to be a technical corrective rather than a reversal, with the Relative Strength Index (RSI) still below 40. For example, 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 bullish side, the initial resistance 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. All the best!