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EUR/USD: Decent bounce from 1.10 still elusive, German data eyed

  • EUR/USD's defense of 1.10 has so far failed to entice bulls. 
  • A notable bounce looks likely, courtesy of the dovish Federal Reserve. 
  • A dismal German employment data would weaken recovery prospects.

EUR/USD is struggling to chart a notable price bounce despite signs of seller exhaustion near key support.

The daily chart shows consecutive long-tailed candles, marking a bear failure to establish a secure foothold below the psychological level of 1.10. So far, however, the bulls have not been able to capitalize on the bear fatigue. 

The currency pair is currently witnessing subdued activity around 1.1015, having remained consolidative around that level in Asia. 

That said, the buyers may step in during the day ahead as the US Federal Reserve on Wednesday kept rates unchanged, but reiterated commitment to higher inflation, reinforcing expectations about further rate cuts. As per the Bloomberg report, traders ramped bets for a rate cut by November’s meeting following the Fed's statement. 

An upward move, however, will likely remain elusive and sellers may push through support at 1.10 if the German employment data pours cold water over the optimism generated by recent macroeconomic numbers like PMIs. 

The data due at 08:55 GMT is expected to show the German economy added 5K jobs in December following November's 8K additions. Meanwhile, the seasonally adjusted Unemployment Rate is forecasted to have remained unchanged at 5%. 

In the North American session, the focus would shift to the US Gross Domestic Product Price Index (Q4) PREL, scheduled for release at 13:30 GMT. 

Technical levels

 

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