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  • The second week of gains for EUR/USD since early November is capped by intraday losses.
  • A shift in Fedspeak over inflation and the ECB pushing for PEPP extension.
  • US data remain firm, but Eurozone economics wane and yields pause downside near 10-week lows.

The EUR/USD forecast remains slightly bullish as the price maintains above the key technical levels. Before Thursday’s European session, the EUR/USD pulls back from an intraday high to 1.1325 and consolidates daily gains to 0.12%.

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Although the monetary policy battle between the European Central Bank (ECB) and the US Federal Reserve appears to have subsided, the major currency pair is rising for the second consecutive week. But headlines about COVID in South Africa and Friday’s US employment report will be critical to moving in the right direction.

Reuters reports that ECB policymakers voiced concerns about a possible tightening of monetary policy in December, despite Fed chief Jerome Powell declining to mention his inflation concerns on the second day of his speech. According to the New York Times, John C. Williams, president of the New York Federal Reserve Bank, said Omicron would widen the supply-demand gap, which would lead to inflationary pressures. Moreover, according to Bloomberg, Cleveland Fed President Loretta Mester suggests rate cuts will accelerate over the next year.

As measured by the 10-year break-even inflation rate of the St. Louis Federal Reserve System (FRS), concerns about a decline in inflation and a two-month low in inflation expectations weigh US Treasury yields. It’s the same with China’s cautious optimism that stock futures and Asian stocks will help them lick their wounds.

President Biden’s administration expanded rules for wearing masks on public transportation after the first Omicron case in the US.

EUR/USD traders may be entertained by jobless claims and Fed and ECB speeches, but the focus is on Coronavirus news and Friday’s non-farm payrolls.

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EUR/USD price technical forecast: 1.1300 holding key importance

eur/usd forecast chart

The EUR/USD price remains supported by the 20-period and 50-period SMAs on the 4-hour chart. The 1.1300 level also provides some support to the buyers. However, the volume data is pointing at further decline towards the lower end of the wide range. The average daily range is so far 36%, which is a little higher than usual. Therefore, we may expect a widespread down bar around the European open, fuel selling towards the 1.1260 area.

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