- The EUR / USD pair falls during the New York session, down 0.08%.
- The monetary policy decisions of the Fed and the ECB will be crucial in the direction of the EUR / USD.
- Fed: A faster reduction in the bond buying program and signs of the possibility of a rate hike would be bullish for the USD.
- ECB: An increase in your bond buying program and a reversal on rates would be bearish for the EUR.
The EUR / USD pair is down for the second day in a row, trading at 1.1275 during the New York session. Market sentiment has remained pessimistic since the opening of Wall Street. Rising prices paid by US producers and last week’s consumer inflation that surpassed the highest level in 1982 put pressure on the Federal Reserve, whose monetary policy announcement will be made official on Wednesday.
In the last few hours, the EUR / USD reduced some of its initial gains, driven by positive reports about the Pfizer-BioNTech vaccine that provides 70% protection against the Omicron variant after two doses. Subsequently, the 1.1300 zone gave way to the USD bulls as macroeconomic data from the US increased the odds of a more rapid reduction in the Fed’s QE.
EUR / USD could head for a retest of the yearly low around 1.1186 on the week if the Fed cuts the number of buying by doubling the amount it initially decided at its November monetary policy meeting. If not, the euro could strengthen, sending the pair above 1.1300.
EUR / USD Price Forecast: Technical Outlook
The EUR / USD has a bearish bias, represented by the daily moving averages (DMA) that reside above the price. Also, the descending triangle formation opens the door for a dip towards 1.1040, but it would encounter some obstacles on the way to the south.
The first support would be 1.1200. A break in the figure would expose the year-to-date low at 1.1186. A clear break of that level would expose the zone of 1.1100, followed by the figure of 1.1000.
On the other hand, the first resistance is at 1.1300, followed by the November 30 high in 1.1382, and then 1.1400 and the DMA of 50 in 1.1453.
Technical Levels
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