- EUR/USD attracts fresh buying on Tuesday and draws support from a modest USD weakness.
- The lack of follow-through buying beyond the 1.0930-35 confluence warrants some caution.
- A break below last week’s swing low is needed to support prospects for any meaningful slide.
The EUR/USD pair regains some positive traction following the previous day's directionless price moves and spikes to a three-day peak, around the 1.0935 area during the Asian session on Tuesday. Spot prices, however, struggle to capitalize on the move beyond the 100-hour Simple Moving Average (SMA) and retreat a few pips in the last hour.
The US Dollar (USD) remains on the defensive for the second successive day and turns out to be a key factor acting as a tailwind for the EUR/USD pair. That said, the Federal Reserve's (Fed) hawkish outlook helps limit the downside for the USD and caps the upside for the major. Traders also seem reluctant to place aggressive bets around the shared currency in the wake of worries about economic headwinds stemming from rapidly rising borrowing costs. The fears were fueled by the disappointing release of flash Eurozone PMIs on Friday, which now leaves the European Central Bank (ECB) in a policy dilemma.
From a technical perspective, the 100-hour SMA coincides with the 50% Fibonacci retracement level of the recent corrective decline from the monthly peak touched last week. This makes it prudent to wait for sustained strength and acceptance above the 1.0930-1.0935 confluence before positioning for any further gains. With oscillators on the daily chart holding comfortably in the positive territory, the EUR/USD pair might then climb back to the 1.1000 psychological mark. Some follow-through buying has the potential to lift spot prices towards the next relevant hurdle near the 1.1080-1.1090 supply zone.
On the flip side, the 1.0900 mark now seems to protect the immediate downside ahead of the 23.6% Fibo. level, around the 1.0880 region. This is followed by last week's swing low, around the 1.0845 zone. A convincing break below the latter might prompt some technical selling and accelerate the fall towards 100-day SMA, currently around the 1.0810-1.0800 area. Failure to defend the said support levels will shift the bias in favour of bearish traders and make the EUR/USD pair vulnerable to weaken further below the 1.0765-1.0760 intermediate support, towards challenging the 1.0700 round-figure mark.
EUR/USD 1-hour chart
Key levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays near 1.0400 in thin holiday trading
EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.
GBP/USD struggles to find direction, holds steady near 1.2550
GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook
Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.
IRS says crypto staking should be taxed in response to lawsuit
In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.