EUR/USD Forecast: Lagarde adds a nail to EUR’s coffin

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1383

ECB President Lagarde said that trimming financial facilities would do more harm than good.
US Treasury yields picked up at the start of the week, reflecting the market’s concerns.
EUR/USD trades at fresh 2021 lows and is poised to fall further.

The EUR/USD pair fell to a fresh 2021 low of 1.14379 and trades nearby ahead of Wall Street’s close, as comments from European Central Bank President Christine Lagarde undermined demand for the shared currency. Mrs Lagarde added nothing new to what the market already knew, as she said that any tightening measure now would cause more harm than good to the economy. Additionally, US data was upbeat, as the country published the NY Empire State Manufacturing Index, which improved to 30.9 in November from 19.8 previously.

Meanwhile, European indexes closed in the green, leading to a strong opening in Wall Street. However, US government bond yields jumped north, pushing equities lower. The yield on the 10-year US Treasury note peaked at 1.62%, while that on the 30-year note reached a two-week high.

On Tuesday, the EU will publish the second estimate of its Q3 Gross Domestic Product, foreseen unchanged at 2.2% QoQ. More relevant, the US will release October Retail Sales, foreseen up 0.7% MoM. An upbeat reading may push the greenback further up, not only against the EUR.

EUR/USD short-term technical outlook

From a technical point of view, the EUR/USD pair is at risk of falling further. The daily chart shows that technical indicators have resumed their declines near oversold readings, reflecting the selling interest’s strength. Additionally, the pair keeps developing below bearish moving averages, with the 20 SMA currently at around 1.1575.

In the near term, and according to the 4-hour chart, the risk is skewed to the downside. Technical indicators have corrected oversold conditions before resuming their declines, with the Momentum rejected from around its 100 level and the RSI indicator heading firmly lower at fresh multi-month lows. Meanwhile, the 20 SMA has extended its slide far below the longer ones and now acting as dynamic resistance near the daily high.

Support levels: 1.1350 1.1310 1.1265

Resistance levels: 1.1425 1.1470 1.1515

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 holds firm near 1.1850 amid USD weakness

EUR/USD remains strongly bid around 1.1850 in European trading on Monday. The USD/JPY slide-led broad US Dollar weakness helps the pair build on Friday's recovery ahead of the Eurozone Sentix Investor Confidence data for February.

GBP/USD holds medium-term bullish bias above 1.3600

The GBP/USD pair trades on a softer note around 1.3605 during the early European session on Monday. Growing expectation of the Bank of England’s interest-rate cut weighs on the Pound Sterling against the Greenback.

Gold remains supported by China's buying and USD weakness as traders eye US data

Gold struggles to capitalize on its intraday move up and remains below the $5,100 mark heading into the European session amid mixed cues. Data released over the weekend showed that the People's Bank of China extended its buying spree for a 15th month in January. Moreover, dovish US Fed expectations and concerns about the central bank's independence drag the US Dollar lower for the second straight day, providing an additional boost to the non-yielding yellow metal.

Cardano steadies as whale selling caps recovery

Cardano (ADA) steadies at $0.27 at the time of writing on Monday after slipping more than 5% in the previous week. On-chain data indicate a bearish trend, with certain whales offloading ADA. However, the technical outlook suggests bearish momentum is weakening, raising the possibility of a short-term relief rebound if buying interest picks up.

Japan's Takaichi secures historic victory in snap election

In Japan, Prime Minister Sanae Takaichi's coalition secured a supermajority in the lower house, winning 328 out of 465 seats following a rare winter snap election. This provides her with a strong mandate to advance her legislative agenda.

Bitcoin, Ethereum and Ripple consolidate after massive sell-off

Bitcoin, Ethereum, and Ripple prices consolidated on Monday after correcting by nearly 9%, 8%, and 10% in the previous week, respectively. BTC is hovering around $70,000, while ETH and XRP are facing rejection at key levels. Traders should be cautious: despite recent stabilization, upside recovery for these top three cryptocurrencies is capped as the broader trend remains bearish.