EUR/USD Forecast: Bulls aiming to recover the 1.1000 threshold

EUR/USD Current price: 1.0956

• The Eurozone confirmed the Harmonized Index of Consumer Prices at 2.4% YoY in November.
• Market participants remain optimistic ahead of inflation updates from major economies.
• EUR/USD is technically bullish, although the momentum is limited.

The EUR/USD pair extends its modest weekly advance on Tuesday, as the US Dollar remains unattractive in the post-central banks’ scenario, with investors looking for better options. Wall Street ended in positive territory on Monday, with the Nasdaq Composite reaching record highs amid persistent optimism. However, the absence of relevant macroeconomic data maintains most major pairs confined within familiar levels, with EUR/USD currently hovering around 1.0950.

European Central Bank (ECB) officials delivered some comments. On the one hand, Andrea Enria, chairperson of the European Banking Authority, noted that there are still significant uncertainties and downside risks for Eurozone banks. On the other hand,  Governing Council member Gediminas Simkus said rate cut expectations are too optimistic, adding investors may have gotten ahead of themselves. Finally, Governing Council member and Bank of France President  Francois Villeroy de Galhau stated the central bank will not raise interest anymore. The comments did not impact the Euro, as they put nothing new on the table.

Meanwhile, the EU released the final estimate of the November Harmonized Index of Consumer Prices (HICP), confirming the annual gauge at 2.4%. On a monthly basis, the HICP was down 0.6%. The United States (US) session will bring November Building Permits and Housing Starts. Additionally, Canada will publish the November Consumer Price Index (CPI), the first of a row of inflation updates ending Friday with the US Core Personal Consumption Expenditures (PCE) Price Index.

EUR/USD short-term technical outlook

The EUR/USD pair is biased higher, according to technical readings in the daily chart, as the pair extends its recovery above all its moving averages. The 20 Simple Moving Average (SMA), however, lacks directional strength and stands a few pips below the 23.6% Fibonacci retracement of the 1.0447/1.1016 rally at 1.0883. In the meantime, technical indicators keep heading north, with the Momentum indicator currently standing at neutral levels and the Relative Strength Index (RSI) indicator hovering around 59.

In the near term, and according to the 4-hour chart, EUR/USD is neutral-to-bullish. Technical indicators aim marginally higher but lack strength enough to confirm a continued advance. Still, the pair is advancing above a bullish 20 SMA, which develops well above the longer ones, in line with the bulls’ dominance. The pair is poised to retest its November monthly high at 1.1016 and even extend its run beyond it.

Support levels: 1.0915 1.0880 1.0845

Resistance levels: 1.0965 1.1000 1.1040