EUR/USD Forecast: Corrective decline could extend towards 1.0630

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0717

Fading optimism weighs on global stocks and benefits the US Dollar.
Market players await words from US Federal Reserve Chair Jerome Powell.
EUR/USD retreats from a critical Fibonacci resistance level, but bears remain side-lined.

The EUR/USD pair trades in a tight range, below a daily high at 1.0751. The market optimism that dominated the start of the week faded ahead of Tuesday's opening. Wall Street trimmed gains and finished Monday mixed, with only the Nasdaq Composite posting gains. Asian stocks also trade mixed, but European ones remain in the red, dragging US futures lower.

However, given the absence of a strong catalyst, movements across the FX board remain limited. The US Dollar is marginally higher, backed by the dismal mood and an uptick in Treasury yields. Market players are waiting for an update on United States inflation, as the country will publish the December Consumer Price Index (CPI) next Thursday. The annual reading is seen at 6.5%, decreasing from 7.1% YoY in the previous month.

So far, the US published the December NFIB Business Optimism Index, which declined to 89.8 from 91.9 in the previous month. The country will later release IBD/TIPP Economic Optimism for January and November´s Wholesale Inventories. More relevantly, US Federal Reserve (Fed) Chair Jerome Powell will participate in a panel discussion titled "Central bank independence and the mandate – evolving views" at the Riksbank's International Symposium on Central Bank Independence in Sweden.

EUR/USD short-term technical outlook

The EUR/USD pair cannot break above the 1.0740 price zone, where it has the 61.8% Fibonacci retracement of its 2022 decline. The daily chart shows that the pair is barely down but still far above bullish moving averages. The 20 SMA advances above the longer ones and provides dynamic support at around 1.0630. Technical indicators, in the meantime, hold directionless within positive levels, reflecting limited selling interest.

In the near term, and according to the 4-hour chart, the ongoing slide seems corrective. The pair trades above all of its moving averages, and with the 20 SMA crossing above the 100 SMA, developing some 100 pips below the current level. At the same time, technical indicators turned marginally lower, retreating from overbought levels but still far from their midlines and without enough strength to support a steeper decline.

Support levels: 1.0685 1.0630 1.0590

Resistance levels: 1.0750 1.0795 1.0800

View Live Chart for the EUR/USD

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.