Euro Trying to Build Support Base at 1.1335 – 1.1300

The Euro is edging higher at the mid-session as the U.S. Dollar weakened after U.S. Treasury yields reversed an earlier rise. The 10-year U.S. Treasury yield hit 1.9% on Wednesday, its highest point since December 2019, after retreating.

The yield on the benchmark 10-year Treasury note moved nearly 2 basis points lower to 1.85% at around 16:00 GMT, after hitting 1.904% earlier. The yield on the 30-year Treasury bond fell 1 basis point to 2.174%.

At 16:55 GMT, the EUR/USD is trading 1.1343, up 0.0016 or +0.14%. The Invesco CurrencyShares Euro Trust ETF (FXE) is at $105.46, up $0.32 or +0.30%.

Overseas, the European Central Bank (ECB) is currently behind on its normalization path, compared to the Fed and the Bank of England, but surging inflation and wider moves in the global bond market have now helped to push yields above zero.

In the U.S., homebuilding increased to a nine-month high in December amid a surge in multi-family housing projects, but soaring prices for materials after the government  nearly doubled duties on imported Canadian softwood lumber could hamper activity.

Housing starts rose 1.4% to a seasonally adjusted annual rate of 1.702 million units last month, the highest level since March.

The volatile multi-family housing segment accounted for the rise in homebuilding last month, with starts for buildings with five units or more surging 13.7% to a rate of 524,000 units.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on January 14.

A trade through 1.1272 will change the main trend to down. A move through 1.1483 will signal a resumption of the uptrend.

The short-term range is 1.1186 to 1.1483. Its retracement zone at 1.1335 to 1.1300 is support. This zone stopped the selling on Tuesday at 1.1315.

The minor range is 1.1272 to 1.1483. Its 50% level at 1.1377 is potential resistance.

The main range is 1.1692 to 1.1186. Its retracement zone at 1.1439 to 1.1499 is resistance. This zone stopped the buying at 1.1483 on January 14.

Short-Term Outlook

The short-term direction of the EUR/USD is likely to be determined by trader reaction to 1.1335 and 1.1300.

Look for the upside bias to resume on a sustained move over 1.1335. Meanwhile, the downside momentum is likely to continue on a sustained move under 1.1300.