EUR / USD declines from daily highs around 1.1340 and clings to 1.1300

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  • In recent hours, the euro’s decline continues, hovering around 1.1300.
  • The Fed’s Bostic and Daly point to a faster reduction in bonds, Barkin preferring to keep pace with $ 15 billion.
  • The EUR / USD break below 1.1300 could pave the way for a retest of the yearly low at 1.1186.

The EUR falls sharply during the American session, down 0.08%, trading around 1.1300 at the time of writing. In recent hours, market sentiment has been mixed. The European stock indices ended the session lower, contrary to the US indices that traded higher. The NZD and GBP are the main winners in the forex market, with the rest of the G8 pairs trading at modest losses.

The EUR/USD It is attempting to break below 1.1300 for the second time as the USD appears to benefit from rising US bond yields, rising from short to long maturities. The 10-year US Treasury yield, one of the barometers of rates, is up two and a half basis points, standing at 1.46%. Meanwhile, the US dollar index, which tracks the performance of the dollar against a basket of six rivals, is up 0.11%, recovering the level of 96, standing at 96.13.

Fed’s Bostic and Daly point to faster bond downsizing, Barkin prefers to keep current pace

Atlanta Fed Chairman Raphael Bostic said: “The longer we have higher inflation, the greater the risk.” In addition, he added that he will push to end the QE gradual reduction sooner rather than later and aim to end it by the first quarter of 2022. In addition, Bostic commented that if inflation remains high at around 4% in the next year , that would be a good case to drive interest rate hikes.

In the same vein, the president of the San Francisco Fed, Mary Daly, said that “the Fed may need to start designing a plan to think about raising interest rates.”

Meanwhile, Richmond Fed Chairman Thomas Barkin said he is supporting the pace of bond cuts. Furthermore, he added that long-term inflation expectations are always a concern.

EUR / USD Price Forecast: Technical Outlook

The EUR / USD daily chart shows that the pair has a bearish bias. The downward sloping Simple Moving Averages (SMAs) are above the spot price, confirming the bearish bias. Furthermore, over the past three days, the EUR / USD has encountered stiff resistance at 1.1340, which has caused the pair to pull back to 1.1300.

In the result of breaking below 1.1300, the first support would be the November 30 low at 1.1235. The break of the latter would expose the low of the year at 1.1186.

On the other hand, the first resistance of the EUR / USD would be the November 30 high at 1.1382, immediately followed by 1.1400. A break above that level could pave the way for further gains. The next resistance would be 1.1459, followed by the 50 SMA at 1.1507.

Additional technical levels

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