The EUR/USD traded as high as 1.1300 in the early European session, despite fresh USD strength, and recouped some of the previous day’s losses.
The pair is trading in a very narrow band above 1.1300 ahead of the release of the weekly Initial Unemployment Claims statistics from the United States.
An Outline Of The Technical Aspects
EUR/USD CHART Source: Tradingview.com
On the negative, the 1.1300 level, which is marked by the 100-period and 200-period simple moving averages on the four-hour chart, provides significant support.
The possibility of more losses towards 1.1270 (static support) exists in the event that a four-hour candle finishes below that level.
Before 1.1360, the initial barrier is aligned at 1.1340 (the static level) (post-ECB high). The pair attempted to surge above that mark on Wednesday but fell back under it before the session ended, underscoring the importance of that level of opposition.
Between now and then, the Relative Strength Index (RSI) signal on the four-hour chart has returned to 50, indicating that buyers have shown no interest in the shared currency thus far.
An Overview Of The Fundamentals
The Euro/Dollar had lost its positive momentum after reaching its highest level in a month on Wednesday when it reached 1.1370.
The lack of liquidity increases the likelihood of rapid changes leading up to the New Year’s holiday, and investors will keep a careful eye on technical levels.
Klass Knot, a policy expert at the European Central Bank, stated earlier in the day that he believes there is a significant probability that inflation in the Euro region will remain over 2% even into 2022.
Conversely, Ignazio Visco, a member of the European Central Bank’s Governing Council, stated that the monetary authority was unlikely to conclude the tapering program before 2023.
Early this month, European Central Bank President Christine Lagarde explained that the central bank would not raise its policy rate until its Asset Purchase Program purchases were completed.
These remarks appear to be making it harder for the common currency to regain its strength during the first half of the European session.
On the other extreme, the yield on the benchmark 10-year US Treasury note rose over 1.5% on Wednesday, helping to keep the Dollar’s losses to a minimum for the time being.
Later in the day, the US Department of Labor’s monthly Initial Jobless Claims data and the ISM-PMI Chicago’s for December will be featured on the US economic docket, which will be broadcast live on Bloomberg.
Although these figures are unlikely to cause a significant market reaction, year-end inflows toward the close of the European session might open the door to wild swings in the market.