EUR/USD Current price: 1.0948
- Easing government bond yields put a cap on the US Dollar’s advance.
- Stock markets trade mixed as market participants await fresh clues on US economic developments.
- EUR/USD remains confined to familiar levels, a directional breakout unlikely in the near term.
The EUR/USD pair trades at the upper end of its latest range, still lacking directional momentum. Market participants stand cautious ahead of a United States (US) inflation update on Thursday, with no other relevant figures released so far in the US or the Eurozone (EU).
Markets trade on sentiment, as reflected by stocks’ behavior, which trade mixed. Most Asian indexes edged lower, although the Nikkei 225 soared to a fresh multi-year high on speculation the Bank of Japan (BoJ) will not be able to drop the ultra-loose monetary policy anytime soon. In the meantime, European stocks trade mostly in the red, although not far from their opening levels.
Meanwhile, softening US Treasury yields weigh on the US Dollar. The 10-year note currently offers 4%, while the 2-year note offers 4.34%, down 3 basis points (bps) ahead of Wall Street’s opening.
On a positive note, the US published MBA Mortgage Applications for the week ending January 5. According to the report, applications to refinance a home loan jumped 19% from the previous week and were 30% higher than the same week one year ago, despite an uptick in the fixed interest rate. Later in the day, the country will publish November Wholesale Inventories.
EUR/USD short-term technical outlook
The daily chart for the EUR/USD pair shows it holds on to modest intraday gains but also that it retains the neutral stance. The pair develops below a still bullish 20 Simple Moving Average (SMA), which provides dynamic resistance in the 1.0970 area. The 100 and 200 SMAs continue to lack directional strength well below the current level. Finally, technical indicators remain stuck to their midlines, reflecting the absence of speculative interest.
The near-term picture is quite alike. In the 4-hour chart, the pair seesaws around a flat 20 SMA, while the 200 SMA provides support around 1.0920 and the 100 SMA lies flat just ahead of the 1.1000 figure. To top it all, technical indicators head nowhere, stuck around their midlines since Jan 5. A directional breakout seems unlikely in the near term, with the pair set to remain within familiar levels until the release of the US Consumer Price Index (CPI).
Support levels: 1.0920 1.0885 1.0840
Resistance levels: 1.0970 1.1015 1.1060
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