EUR/USD Trades Near 1.1600 but Could Soon Resume Its Decline

EUR/USD Current price: 1.1587

• EU Sentix Investor Confidence improved from 16.9 to 18.3 in November, missing expectations.
• Top US Federal Reserve officials set to leave their positions in early 2022.
• EUR/USD trades near 1.1600 but could soon resume its decline.

The EUR/USD pair neared 1.1600 on Monday, trading around 1.1590 by the end of the US session. The dollar shed ground on the back of a better market mood and as speculative interest took some profit out of the table after the dollar’s sharp appreciation following an upbeat US employment report.

On the data front, the EU published Sentix Investor Confidence, which improved from 16.9 to 18.3 in November, missing expectations of 18.6. The US calendar has no data included, but several Fed officials will be on the wires, including chief Jerome Powell. It seems unlikely that US policymakers could surprise investors after announcing tapering last week.

As for the US, there were no macroeconomic releases, although several US Federal Reserve policymakers gave speeches within different events, although references to monetary policy were scarce. More relevant is the fact that Fed’s Randal Quarles said he is stepping down from his post around the end of the year. Vice-Chair Richard Clarida leaves in January, while Powell’s term ends in February.  A Fed’s reshuffle could bring some interesting changes next year.

On Tuesday, Germany will publish the November ZEW Survey, with the Economic Sentiment seen contracting to 19 from 22.3. The country will also publish the September Trade Balance. Also, ECB’s President Christine Lagarde will offer a speech, while in the US, the focus will be on comments from Fed’s chief Jerome Powell.

EUR/USD short-term technical outlook

The EUR/USD pair is up for a second consecutive day, recovering from its 2021 low of 1.1512. The daily chart shows that the case for a bullish continuation is blurry as the pair remains below a flat 20 SMA, the latter around 1.1600, as the longer ones maintain their bearish slopes above it.

In the near term, and according to the 4-hour chart, the pair may test bears’ determination at around 1.1615, the immediate resistance level. The pair has managed to advance above its 20 SMA, while the longer ones converge in the 1.1610 with modest bearish slopes. Technical indicators have crossed their midlines into positive levels but already lost their bullish strength.

Support levels: 1.1550 1.1510 1.1470  

Resistance levels: 1.1615 1.1670 1.1710