EUR/USD MId-Session Technical Analysis for January 10, 2022

The Euro is edging lower against the U.S. Dollar on Monday amid bets that U.S. inflation will bolster the case for higher interest rates by the U.S. Federal Reserve. Compounding the single currency’s weakness is the European Central Bank’s (ECB) dovish stance on rising prices.

At 14:08 GMT, the EUR/USD is trading 1.1300, down 0.0060 or -0.53%. On Friday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $105.58, up $0.65 or +0.62%.

Although the headline jobs number missed on Friday, better-than-expected unemployment figures and U.S. inflation data, should be enough to build a case for a sooner-than-expected rate hike by the Fed. This is supportive for the U.S. Dollar. Traders have priced a more than 90% chance of a rate hike in March according to CME’s FedWatch tool.

Meanwhile in Europe, investors are sticking to their view that the ECB is still far behind the Fed in the tightening cycle despite data showing Euro Zone Inflation jumped to 5% in December.

The divergence between the hawkish Fed and the dovish ECB is making the U.S. Dollar a more attractive investment.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1272 will reaffirm the downtrend. A move through 1.1386 will change the main trend to up.

The nearest resistance is the retracement zone at 1.1329 to 1.1343. The nearest support is the long-term Fibonacci level at 1.1291, followed by short-term Fibonacci level at 1.1262.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Monday is likely to be determined by trader reaction to 1.1291.

Bullish Scenario

A sustained move over 1.1291 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for an intraday surge into 1.1329 to 1.1343.

Bearish Scenario

A sustained move under 1.1291 will signal the selling pressure is getting stronger. The first target is the main bottom at 1.1272, followed by the Fibonacci level at 1.1262.

Taking out the Fib level at 1.1262 could trigger an acceleration to the downside with the next targets a pair of bottoms at 1.1235 and 1.1222.