The bears are seemingly in control of the Euro. Thus, pushing it towards the daily low levels on January 10.
Weakening EUR/USD Amidst Renewed Buying Interest In USD
Renewed bullishness on the USD has caused a weakening of the EUR/USD trading pair. The positive investor mood caused the renewed bullishness in the USD following unemployment data released last Friday. Consequently, the USD index (DXY) has made slight gains and is now around 96.00 after hitting the 95.60 range this past week.
The rise in US yields, which is close to the 1.85% levels (a first in almost 24 months), is attributed to be the cause of the dollar rebound and spike in USD spots. The downtrend of the German 10-year bond towards the -0.02% range (a first in over two years) is another important reason for the spike in the USD spot.
Investor confidence analytics. Source: Sentix
Furthermore, the Sentix index indicated that investor confidence has risen to nearly 15.0 this month, with the unemployment rate in the Euro bloc declining to about 7.15% (it was about 7.29% two months ago). As of this writing, there are no events or news likely to impact the current EUR/USD trend. The only expected news is the wholesale inventories for November 2021 which should be available before today’s evening trading session.
Possible EUR/USD Moves
The EUR/USD has been consolidating for over two months; it has made considerable gains to trade around the 1.1400 level, while the 1.123 level acts as support. Meanwhile, the pair’s price has been mainly affected by the difference in policy between Europe’s apex and the US Federal Reserve and the performance of the USD.
The rising inflation rates in Europe and Central America have also been of major influence. Nevertheless, investors’ mood and economic growth possibilities about the EUR/USD trend will continue to be largely affected by the COVID-19 pandemic. Possible news/events that can impact the Euro this week are the speeches by the ECB president on Tuesday and Friday, industry production news on Wednesday.
On Tuesday, the ECB president will provide updates regarding unemployment data while analyzing Germany’s 12-month GDP for last year in his Friday speech. Some other issues that will be crucial to the Euro performance in the near term include ECB’s tapering measures, ECB’s position on rising inflation in the Euro region, France’s presidential elections, and the economic performances of European nations as the pandemic wears on.
Key EUR/USD Range
The Euro lost 0.27% to trade at 1.1332 with its next crucial resistance at the 1.1370 region, which coincides with the 50-day EMA. If it can flip this resistance into support, its next crucial resistance will be found at the 1.1387 and 1.1465 levels.
Conversely, its next support will be the 1.1222 level once it declines from the 1.1273 range, and a further dip will make it find support at the 1.1187 levels. The US CPI data is another key determinant for this pair this week. A higher CPI index will heighten the Fed’s hawkish move regarding the inflation rate.