Bulls give up despite general optimism

Current price EUR / USD: 1.1302

  • US indices flirted with record highs as the S&P rallied in uncharted territory.
  • Market players remain optimistic about the evolution of the pandemic.
  • EUR / USD has fallen and may extend its fall in the coming sessions.

The EUR / USD pair is trading in the 1.1300 price zone after another day of limited activity. The pair peaked at 1.1332 and fell to 1.1289 after Wall Street opened as the greenback benefited from some temporal demand following the release of encouraging local data. The Richmond Fed’s manufacturing index in the United States improved from 11 to 16 in December, while the October housing price index stood at 1.1%, missing the 1, 2% expected but above the previous 0.9%.

The EU’s macroeconomic calendar had nothing to offer, but it will include November money supply on Wednesday. The United States will release the November merchandise trade balance and wholesale inventories for the same month.

Investors remain optimistic because, despite the record number of coronavirus contagions, major economies are ignoring strict restrictive measures. US indices have flirted with all-time highs, with the S&P rallying to uncharted territory. Stocks lost momentum before the close, squeezing their intraday gains. Yields on US government bonds, on the other hand, fell, with the yield on the 10-year Treasury bill currently standing at around 1.46%.

Short-term technical outlook EUR / USD

EUR / USD is falling daily, holding a handful of pips above the 1.1300 level and still stuck around a Fibonacci level, the 23.6% retracement of the November slide. The 20 DMA remains flat at roughly the same level, while the longer moving averages maintain their bearish slopes well above the current level. Technical indicators, meanwhile, have fallen but remain at neutral levels.

The 4 hour chart shows that the pair is trading between moving averages, which lack clear directional strength. The Momentum indicator is hovering without direction just below its midline, as the RSI gains bearish strength to around 45, hinting at another leg to the south.

Support levels: 1.1290 1.1250 1.1210

Resistance levels: 1.1345 1.1380 1.1425

See live VSheart for EUR / USD