EUR/USD to test 1

Euro Dollar Forecast: EUR/USD Bullish or Bearish Amid Major Events

EUR/USD Price Setup:

  • EUR/USD trades within rising channel
  • EUR/USD Price action remains at the mercy of risk sentiment
  • Moving Averages provide additional support and resistance for the pair

EUR/USD prices continue to trade within the rising channel preceding an array of high impact economic events scheduled to take place throughout the course of the week.

Although the prospects of a Covid-19 vaccination appear to be promising, the discovery of new variants combined with a rollout that has lagged behind the promises of the Trump administration, have hindered the prospects of a swift economic recovery, highlighting the urgency for the still looming Fiscal Stimulus package. With renewed lockdown measures implemented throughout Europe and the United States, this weeks major risk events may create additional volatility, driving price action in either direction. For the USD, apart from the Wednesday’s highly anticipated Federal Reserve policy meeting, other major data releases include the advance estimate for Q4 GDP, the December PCE report, December advance durable goods orders and Conference Board’s index of consumer confidence .Euro Dollar Forecast: EUR/USD Bullish or Bearish Amid Major Events

Meanwhile, Germany, Europe’s largest economy will release January’s inflation data, GDP and unemployment data.

Euro Dollar Forecast: EUR/USD Bullish or Bearish Amid Major Events

DailyFX Economic Calendar

EUR/USD Technical Analysis

Currently EUR/USD continues to trade within the rising channel with the formation of a bearish engulfing candle providing a possibility that short-term selling pressure may break the slight uptrend which has prevailed since mid-Jan. Meanwhile, the 50 and 100 period Moving Average continue to encapsulate price action, while trading in an area of confluency which has historically provided support and resistance for the major currency pair.

EUR/USD 4 Hour Chart

EURUSD 4 Hour Chart

Chart prepared by Tammy Da Costa, IG

From a longer-term perspective, price action on the weekly chart continues to remain faithful to the key Fibonacci retracement levels of major historical moves while the Relative Strength Index (RSI) remains within range but is likely to enter into oversold territory in the near future should US Dollar weakness buoy further Euro strength.

EUR/USD Weekly Chart

EURUSD Weekly Chart

Chart prepared by Tammy Da Costa, IG

Should bulls take charge once again, a break above the key psychological level of 1.2200 could result in bullish continuation with the potential for tests towards the January highs.

However, a break below current support could see bears testing the 50% Fibonacci retracement level of the historical move, at 1.2100.

Credit: DailyFX

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