EUR/USD Fails To Sustain Gains After U.S. Data Fuels Recession Fears
2023.01.19 05:54
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The traded little changed by the end of the U.S. session on Wednesday after being rejected by a fresh nine-month high amid renewed recession fears.
At the time of writing, the EUR/USD pair is trading at the 1.0790 area, just a few pips above its opening price, after hitting its highest price since April 2022 at 1.0887 earlier on the day.
On Wednesday, data from the U.S. fueled concerns about an economic slowdown in the world’s biggest economy. Retail sales contracted by 1.1% during December, while industrial production declined by 0.7% in the same period, missing market expectations.
Meanwhile, the Producer Price Index () rose at an annual pace of 6.2%, easing from 7.3% in November.
In the Eurozone, the Harmonized Index of Consumer Prices () annual inflation rate was confirmed at 9.2% in December, slowing from 10.1% in November.
Signs of a cooling economy triggered risk aversion and boosted the dollar versus most competitors during the New York session. Main Wall Street indexes were in the red while U.S. bond yields dropped. At the same time, the euro remains under pressure after reports the European Central Bank (ECB) might slow the pace of rate hikes after the February meeting.
From a technical perspective, the EUR/USD pair holds the bullish tone on the daily charts, although the upward momentum is fading. Indicators have turned flat but hold above their midlines, while the price seems to have found decent support at the 1.0765 area.
A loss of the mentioned support could risk a steeper pullback over the following sessions, targeting 1.0720 and the 20-day SMA at around 1.0685.
On the flip side, a break above the 1.0890-1.0900 resistance zone could reignite the bullish momentum, paving the way towards 1.0935 en route to 1.1000.
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