EUR/USD Forecast: Recovered Some Ground But Is Still At Risk Of Falling

EUR/USD Current Price: 1.2196

• Upcoming US President Joe Biden is likely to announce more stimulus on Thursday.
• The market’s sentiment improved just modestly, Treasury yields kept rallying.
• EUR/USD recovered some ground but is still at risk of falling.

The EUR/USD pair posted a modest intraday advance this Tuesday, consolidating its latest decline at around 1.2150 for most of the day. Demand for the greenback receded, but the shared currency was unable to recover the ground lost on Monday. Equities traded with a mixed tone, as despite optimism about possible fiscal stimulus in the US, investors were cautious. Upcoming US President Joe Biden is scheduled to speak next Thursday, and speculation points to an announcement on stimulus on that event.

Data wise, investors have little to take care of. The Union didn’t publish macroeconomic data, while the US released minor reports.  The December NFIB Business Optimism Index contracted from 101.4 to 95.9, missing the market’s expectations, while the January IBD/TIPP Economic Optimism index improved from 49 to 50.1.

This Wednesday, the ECB will publish November Industrial Production, while ECB’s head, Christine Lagarde is scheduled to speak. The US will release December inflation figures, with core annual inflation foreseen steady at 1.6%.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair is still at risk of falling, despite trading near its daily highs in the 1.2190 price zone. The 4-hour chart shows that a mildly bullish 200 SMA continues to provide dynamic intraday support, although the pair remains below a firmly bearish 20 SMA. Technical indicators have recovered further from oversold readings, but have lost directional strength within negative levels, indicating limited buying interest. Additional declines are more likely on a break below 1.2125, the immediate support level.

Support levels: 1.2170 1.2125 1.2080  

Resistance levels: 1.2210 1.2250 1.2300

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