EUR/USD Forecast: Lacks Bullish Potential In The Near-Term, Needs To Regain 1.2100

EUR/USD Current Price: 1.2086

• Central banks reaffirmed the need for monetary policy in a pandemic context.
• US employment-related data came in worse than anticipated.
• EUR/USD lacks bullish potential in the near-term, needs to regain 1.2100.

The EUR/USD pair edged higher on Thursday, as demand for the greenback somehow receded.  The risk-related sentiment turned sour and Wall Street plummeted after its overseas counterpart traded dully. Optimism faded after the European Central Bank published the Meeting Accounts, as policymakers noted that ample monetary stimulus remains essential, pretty much the same stance the US Federal Reserve offered a day before. Softer Treasury yields also played their role, pushing the dollar lower.

Data wise, the  US published Initial Jobless Claims for the week ended February 12. The number of people seeking jobs increased to 861K, much worse than the 765K expected, and in line with the Fed’s view of a softening recovery in the sector. January Housing Starts plunged 6% in the month, while Building Permits were up 10.4%. The EU released the Consumer Confidence Indicator, which rose to -14.8 in February from -15.5 in the previous month.

This Friday, the focus will be on Markit preliminary estimates of its PMIs for the EU and the US. The market expects business activity to have shrunk from its previous monthly readings, with the European services sector seen falling further into contraction territory.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair has traded as high as 1.2089, now developing a few pips above the level. Throughout the American session, the pair has met buyers around 1.2060, where the pair has the 38.2% retracement of its November/January rally. Chances of a steeper advance seem limited in the near-term, as, in the 4-hour chart, the pair was incapable of recovering above any moving average. The Momentum indicator advances within negative levels, but the RSI indicator has turned flat around 48, signaling limited buying interest.

Support levels: 1.2060 1.2020 1.1970  

Resistance levels:  1.2110 1.2160 1.2200

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