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EUR/USD Corrects Lower, Here Are Important Levels To Watch

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Aayush Jindal

Key Highlights

  • EUR/USD started a downside correction from the 1.0740 resistance zone.
  • The key support is seen near the 1.0500 zone on the 4-hours chart.
  • GBP/USD dipped sharply after tagging the 1.2450 resistance zone.
  • The German IFO Business Climate Index could increase from 86.3 to 87.2 in Dec 2022.

EUR/USD Technical Analysis

The Euro gained pace above the 1.0620 resistance zone against the US Dollar. EUR/USD even climbed above the 1.0700 level before it faced sellers.

Looking at the 4-hours chart, the pair settled well above the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours). It traded as high as 1.0736 before there was a downside correction.

The bears were able to push the pair below the 1.0650 support zone. There was a clear move below the 38.2% Fib retracement level of the upward move from the 1.0443 swing low to 1.0736 high.

On the downside, the first major support is near the 1.0550 level. It is near the 61.8% Fib retracement level of the upward move from the 1.0443 swing low to 1.0736 high. The next major support is near the 1.0500 zone and the 100 simple moving average (red, 4-hours).

If there is a downside break below the 100 simple moving average (red, 4-hours), the pair could decline towards the 1.0440 support zone in the coming days.

On the upside, an initial resistance is near the 1.0665 level. The next major resistance may perhaps be near 1.0695. A clear move above the 1.0695 resistance might start a steady increase.

In the stated case, EUR/USD may perhaps rise towards the 1.0740 level. Any more gains could lead the pair towards the 1.0800 resistance zone.

Looking at GBP/USD, the pair extended its increase above the 1.2400 resistance before the bears appeared and there was a sharp downside reaction.

Economic Releases

  • German IFO Business Climate Index for Dec 2022 – Forecast 87.2, versus 86.3 previous.
  • German IFO Current Assessment Index for Dec 2022 - Forecast 93.5, versus 93.1 previous.
  • German IFO Expectations Index for Dec 2022 – Forecast 82, versus 80 previous.
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