EUR/USD Price Analysis – Downward Trendline to Drive Selling Under $1.1350

The EUR/USD ended the day at $1.1340, having reached a high of $1.1360, and a low of $1.1300. Because of the falling US dollar prices and the enhanced risk-off market sentiment, the EUR/USD pair has turned green again. The US Dollar Index, which measures the value of the greenback against a basket of six major currencies, tumbled to 95.5 on Friday, weighing on the US dollar and adding to the gains in the EUR/USD pair. Investors in the US dollar were under pressure on Friday, due to the Fed’s next policy meeting, which is fast approaching.

The US Federal Reserve is anticipated to announce a specific timeline for future rate hikes this year. Market participants had already begun pricing in these anticipations ahead of the announcement, dragging the dollar lower for the day. On Friday, however, US Treasury Secretary, Janet Yellen, also failed to generate positive momentum in the greenback. Yellen expressed confidence that the Fed and the Biden administration would protect the economy from record-high inflation.The Consumer Confidence figures, which remained constant at -9, were released at 19:57 GMT. On the US side, the CB Leading Index remained unchanged at 0.8 percent. The data from both sides had no effect on the momentum of the EUR/USD currency pair, leaving it at the mercy of US dollar momentum and market sentiment.

On the other hand, the Euro was solid against the US dollar, as a result of the ECB President’s positive remarks. Christine Lagarde, chief economist of the IMF, stated on Friday that inflation in Europe is unlikely to reach the levels seen in the United States. Expectations of rising inflation have cast doubt on the ECB’s monetary policy, as predecessor banks in the UK and the US approach normalisation. Eurogroup inflation reached a record high of 5% in December, owing primarily to rising energy prices. Despite increased levels of inflation, the ECB has stated that it will not raise interest rates as quickly as the US Federal Reserve Bank and the Bank of England.

She clarified that the labour market in the United States was at an all-time low, and that the situation in Europe was nothing special by comparison. She went on to say that US demand was currently 30% higher than pre-pandemic levels, while Europe was just about at pre-pandemic levels, and that there was no need to raise interest rates just yet. Yellen’s comments boosted the single currency, the Euro, and this resulted in an attempt to push the EUR/USD higher on Friday.

The EUR/USD currency pair is trading at 1.1340, with a selling bias. On the 2-hour timeframe, the downward trendline extends solid resistance at 1.1360. Closing of candles under the downward trendline resistance is supporting odds of a continued downtrend.

Support               Resistance
1.1308                  1.1368
1.1274                  1.1394
1.1247                  1.1428
Pivot Point:        1.1334
On the lower side, immediate support for the EUR/USD remains at 1.1305, and a breakout here could lead the pair towards 1.1260. On the flip side, the resistance remains at 1.1360, and a surge in demand could open up additional room for the uptrend, until the 1.1404 level. Consider staying bearish below 1.1360 today and vice versa. Good luck!