EUR/USD heads for biggest weekly gain since November despite Friday’s slide

• EUR/USD about to post the highest weekly close since May 2022.
• US Dollar back under pressure, heads for sharp weekly losses.
• US Consumer Confidence rises more than expected in January.

The EUR/USD trimmed daily losses during Friday’s American session, rising back above 1.0800. The euro was holding onto significant weekly gains, headed toward the biggest close since May 2022.

US Dollar recovers but remains under pressure

The US Dollar rebounded modestly on Friday after a sharp decline the day before, following US inflation data. The numbers showed the Consumer Price Index slowed down further in December, increasing expectations that the Federal Reserve will hike by 25 basis points in February, instead of 50 bps.

Data released on Friday showed the University of Michigan Consumer Sentiment Index rose in January to 64.6, surpassing expectations of 60.5 and above the 59.7 of December. The numbers helped risk appetite but not the Dollar that pulled back.

EUR/USD resumes uptrend

After pulling back last week, EUR/USD resumed the upside breaking the 1.0700 area decisively. The chart shows the euro clearly bullish but many technical indicators are in overbought territory.

“Should the pair advance beyond 1.0870, the bullish case will gain adepts. 1.0950 and 1.1020 are the next resistance levels to watch, ahead of the afore mentioned 1.1106. A daily close below 1.0745 will discourage buyers, and could trigger a downward corrective extension, initially towards 1.0640 and later to 1.0515, the 50% retracement of the 2022 slump”, says Valeria Bednarik, Chief Analyst at FXStreet.

Technical levels