- US Dollar under pressure amid risk appetite, lower Treasury yields.
- Holiday-thinned trading will persist until next week.
- EUR/USD at its highest level in five months, the next resistance at 1.1150.
The EUR/USD rose further on Wednesday and climbed above 1.1100 for the first time since July, boosted by a weaker US Dollar across the board. The Greenback remains under pressure as US Treasury yields reach fresh lows.
The US Dollar Index (DXY) fell below 101.00, its lowest level in five months. At the same time, US yields continue to trend lower as markets anticipate rate cuts from the Federal Reserve (Fed) next year, while equity prices remain near recent highs. Such a combination continues to weigh on the US Dollar, especially in holiday-thinned trading.
No significant reports were released on Wednesday, and on Thursday, the most important one will be the US weekly Jobless Claims. In Europe, the most relevant report will be Spain's preliminary inflation figures for December, which will be released on Friday.
As the year 2023 comes to an end, calm waters continue to weigh on the US Dollar. Next week, as markets return to normal functioning, US employment data will be crucial.
EUR/USD short-term technical outlook
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The EUR/USD confirmed its decisive break above 1.1000 and quickly reached 1.1100. The pair peaked at 1.1122 before pulling back modestly. The bullish momentum remains in place despite overbought readings in the technical indicators across most timeframes. The trend is up and firm, although some consolidation seems overdue.
On the 4-hour chart, the bias is to the upside. However, technical indications suggest some consolidation may occur ahead of the Asian session, likely between 1.1110 and 1.1080. The 1.1050 zone has become a relevant support area, followed by the 20-Simple Moving Average (SMA) at 1.1030. Only below 1.0980, the short-term bias could become neutral. Corrections could be seen as buying opportunities, keeping the downside limited.
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