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EUR/USD Forecast: Flirted With 1.1200 But Was Unable To Clear The Level

Valeria Bednarik - Chief Analyst at FXStreet

EUR/USD Current Price: 1.1191

  • Markit estimates of services output revised higher for the EU and the US.
  • Tensions between the US and Iran keeping investors in cautious mode.
  • EUR/USD flirted with 1.1200 but was unable to clear the level.

The EUR/USD pair is ending the first day of the week with modest gains, having traded between 1.1153 and 1.1205. Fears dominated the first session of the day, amid persistent tensions between the US and Iran after US President Trump ordered the killing of a top Iranian Commander last Friday. The shared currency managed found support during London trading hours on better-than-expected data, as the final versions of Markit output indexes were revised higher. The German Services PMI printed 52.9, while the EU Services PMI was revised to 52.8, better than the previous estimate of 52.4. However, the Composite index came in at 50.9, with the modest improvement, still indicating weak economic growth.

The greenback managed to recover some ground post-Wall Street’s opening, as US Markit PMI were also upwardly revised as the Services index came in at 52.8while the Composite PMI resulted in 52.7, both also beating expectations. US data helped to partially offset fears, with equities trimming most of their intraday losses ahead of the close.

This Tuesday, the EU will release November Retail Sales, seen up by 0.6% MoM, and the preliminary estimate of December inflation. EU’s CPI is expected to have risen by 1.3% YoY. Later in the day, the US will release the official ISM Non-Manufacturing PMI, foreseen at 54.5 in December from 53.9 in the previous month.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair spent most of the last trading session of the day hovering around the 23.6% retracement of the latest daily advance, settling around the 1.1200 figure. The bullish potential is limited according to the 4-hour chart, as the pair is struggling to retain gains above a mild-bearish 20 SMA but holding above the larger ones, which retain their bullish slopes. Technical indicators have turned lower, the Momentum within neutral levels, and the RSI at around 55. The risk of a downward extension will increase on a break below 1.1140, a static support level.

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