EUR/USD Price Analysis: Eyes 2021 lows near 1.1185 on hawkish Fed-led decline

• EUR/USD eyes deeper declines as the key support gives way.
• The Fed tilts hawkish, hinting at balance-sheet reduction and March rate hike.
• A downside break of the key daily support line opens floors towards 2021 lows.

EUR/USD is pressurizing the daily lows, as it heads towards 1.1200 amid a relentless rise in the US dollar across the board.

The greenback receives a double booster shot, with the hawkish Fed outlook-driven downbeat mood boosting its safe-haven appeal. Meanwhile, spiking US Treasury yields on faster and more Fed rate-hikes also add to the upside in the dollar.

The Fed kept its policy settings on hold but pledged to tame inflation by sooner interest rates hike and decrease in its bond-holdings once the rate-hike cycle kicks in.

The euro remains undermined by the divergent monetary policy outlooks between the Fed and the ECB. The ECB continues to downplay 2022 rate hike expectations, despite soaring inflation in the old continent.

Attention now turns towards the US Q4 GDP release for fresh trading impetus while the Durable Goods data will be also eyed.

EUR/USD broke the two-month-long ascending trendline support, then at 1.1295, on a daily closing basis, opening floors for a test of the 2021 lows of 1.1186.

Ahead of that target, bears will challenge the 1.1200 round level.

The 14-day Relative Strength Index (RSI) remains bearish below the midline, suggesting that sellers will likely maintain control in the near term.

EUR/USD: Daily chart

On the flip side, bulls need to take out daily highs of 1.1244 to unleash the additional recovery towards the trendline support now resistance at 1.1298.

Further up, the downward-sloping 50-Daily Moving Average (DMA) at 1.1312 will come into play.

The next significant resistance is envisioned at the mildly bearish 21-DMA at 1.1335.

EUR/USD: Additional levels to consider