The EUR/USD pair fell on Thursday to 1.1130, a level that was last seen in May 2020. The dollar appreciated through all sessions, surging in Asia on the back of a hawkish US Federal Reserve and hints for a rate hike in March coming from chief Jerome Powell himself. The greenback gained additional momentum after the US reported its annualized quarterly growth, as the Gross Domestic Product surpassed expectations in Q4 2021 by printing 6.9%.
The positive figure also fueled equities temporarily, as Wall Street recovered all the ground lost the post-Fed decision, although shed indexes trimmed gains heading into the close. The US also reported Initial Jobless Claims, which printed at 260K in the week ended January 14, as expected, while December Durable Goods Orders missed the market’s expectations, down by 0.9% in the month.
On Friday, Germany will release the preliminary estimate of its Q4 GDP, while the EU will publish the January Economic Sentiment Indicator. As for the US, the country will publish December Personal Consumption Expenditures, including the core PCE Price Index, foreseen a 4.8% YoY, and the January Michigan Consumer Sentiment Index.
The EUR/USD pair heads into the Asian opening trading near the mentioned daily low, anticipating a bearish continuation despite extreme oversold readings in near-term charts. In the daily chart, the pair has collapsed below all of its moving averages, while the Momentum indicator heads south almost vertically, approaching oversold levels. The RSI indicator, in the meantime, maintains its bearish slope at around 32.
The 4-hour chart shows that technical indicators pared their slides, with the Momentum recovering modestly and the RSI consolidating around 18. Meanwhile, the 20 SMA accelerated south below the longer ones, reflecting strong selling interest. As long as the pair remains below the 1.1200 price zone, the risk will remain to the downside, with approaches to the latter probably attracting sellers.
Support levels: 1.1105 1.1060 1.1015
Resistance levels: 1.1185 1.1220 1.1260