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EURUSD struggles to regain 1.11

FX:EURUSD   Euro / U.S. Dollar
During a strong sell-off late last week, EURUSD derived support around the 100-DMA which capped the downside pressure on Monday as well. The decline was mostly due to a pickup in dollar demand on the back of decent US GDP and PCE data – the figures mostly came in line with expectations and helped to further ease market concerns over a possible recession in the United States.

Today, the pair once again encountered a local resistance around 1.11 and turned negative in the daily charts , after a limited recovery overnight. The common currency lacks the directional impetus amid thin pre-holiday trading. As a reminder, after today’s shortened session, many Western stock markets will be closed on Wednesday for Christmas. Amid low liquidity, EURUSD could settle in a tight range between the 1.11 handle and the 100-DMA around 1.1060.

So far, it looks like the potential for a break below the moving average is limited. At the same time, chances of a break above 1.11 are low, as risk sentiment looks subdued now, with most equity markets show mixed dynamics amid the lack of drivers and significant news. In a wider picture, the common currency remains in a downtrend since early-2018, when the pair was rejected from highs above 1.25. as monthly timeframes suggest, to break this trend, the euro needs to retrace its losses to at least 1.16.

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