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EURUSD: buyers push for retracement to 1.1385

The EURUSD rose 0.15% to 1.1343 on Wednesday, January 19 amid relatively subdued volumes. During the first half of the day, the demand for risk-sensitive assets remained firm against the backdrop of a recovery in US index futures and bull-flattening of the 10-year UST yield.

Equity market trading kicked off to the upside, but sank into the red by the close. The S&P 500 fell 1% to 4,532, and the Nasdaq fell 1.15% to 14,340.25. The benchmarks were led lower by mega-caps such as Amazon, Tesla and Apple, with investors ditching equities as they are unable to assess profit potential in view of monetary policy tightening.

The key pair rebounded to 1.1357, after which activity by speculatively minded players subsided substantially. In the upshot, the euro closed Wednesday’s session at 1.1343.

Today’s macro agenda (GMT+3)

  • 13:00 Eurozone and Germany: CPI (December)
  • 15:30 EU: minutes from ECB monetary policy meeting
  • 16:30 US: initial jobless claims (January)
  • 18:00 US: existing home sales (December)
  • 19:00 US: EIA weekly petroleum status report

Current outlook

Major currencies showed mixed performance in Asian trading, The aussie traded up 0.3%, while the kiwi shed 0.3%. AUDUSD and AUDNZD bounced on strong labor market data out of Australia in December. Conversely, the New Zealand dollar came under pressure.

Meanwhile, US index futures are on the rise. The euro is trading at 1.1350, with price action hovering near the 55-day SMA (balance line), which is strengthened by the January 14 trendline from the top of 1.1483. Euro crosses currently look ambiguous. Unless the outlook worsens during European trading, we could see the 1.1385 level tested by the end of the day.

The pair's rebound from 1.1315 is a correction to the leg down from 1.1434 to 1.1315. And if US stocks see a resumption of heavy selling, the EURUSD pair risks landing at 1.1305 by the end of the week.

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