- EUR/USD has been struggling to make a decisive move in either direction.
- Hawkish Fed commentary helps the dollar stay resilient against its rivals.
- The pair is likely to continue to move sideways ahead of Friday's US jobs report.
Following Tuesday's decisive rebound, EUR/USD seems to have gone into a consolidation phase above 1.1300 as investors remain on the sidelines while waiting for the next significant catalyst. Ahead of Friday's November jobs report from the US, the pair is likely to extend its sideways grind.
On Wednesday, Cleveland Fed President Loretta Mester told Bloomberg that she was in favour of speeding up the QE taper so the Fed would have more flexibility if it saw the need to hike the policy rate earlier than planned. Despite these remarks, the US Dollar Index struggled to gain traction, suggesting that markets have already priced in the hawkish tilt in the Fed's policy outlook.
On the other hand, Reuters reported that European Central Bank (ECB) policymakers are concerned that the increased uncertainty surrounding the economic outlook will make it difficult for them to decide on the QE adjustment in December.
Since the ECB is not expected to signal a rate hike in 2022, the shared currency stays on the back foot, limiting EUR/USD's upside.
Later in the session, the US Department of Labor will release the weekly Initial Jobless Claims' data. Market participants are likely to ignore this report and stay focused on the Nonfarm Payrolls data.
EUR/USD Technical Analysis
Although the Relative Strength Index (RSI) indicator on the four-hour chart is above 50, EUR/USD candles on the same chart failed to close above the 100-period SMA, suggesting that buyers are not yet convinced about an extended rebound.
1.3330 (100-period SMA) aligns as first resistance before 1.1360 (Fibonacci 38.2% retracement of November's downtrend) and 1.1400 (Fibonacci 50% retracement).
Supports could be seen at 1.1300/1.1290 (psychological level, Fibonacci 23.6% retracement), 1.1270 (50-period SMA) and 1.1235 (Tuesday low).
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