EUR/USD to fall toward 1.1000 if 1.1100 support fails

EUR/USD has slumped to its weakest level in more than a year. Buyers are unlikely to take action, subsequently, there is no convincing recovery in sight for the euro, in the view of FXStreet’s Eren Sengezer.

Investors await EU sentiment and US inflation data

“The European Commission will release the Consumer Confidence, Industrial Confidence, Services Sentiment, Business Climate and Economic Sentiment indexes for January. Even if these data point to an improvement in consumer and business confidence in the euro area, the shared currency is unlikely to stage a convincing recovery against the greenback.”

“The Core PCE Price Index is expected to rise to 4.8% in December and a stronger-than-forecast print should allow the dollar to continue to outperform heading into the weekend. On the flip side, a soft inflation reading could cause the greenback to lose some interest but such a market reaction is likely to remain short-lived.”

“Even if the pair were rise above 1.1150 and return within the descending channel, sellers are likely to remain in control as long as the 1.1220 (upper limit of the descending channel) resistance holds.”

“On the downside, 1.1100 (psychological level) aligns as the next support. Back in January 2020, EUR/USD extended its decline to 1.1000 it broke below 1.1100 and a similar action could be expected in the short term.”