EUR/USD Forecast: Bears still threaten triple-bottom at 1.2125, three keys to the next moves
Premium|Take advantage of 50% OFF on your first month.
Start your subscription and get access to all our original articles.
You have reached your limit of 5 free articles for this month.
Get Premium without limits for only $9.99 for the first month
Access all our articles, insights, and analysts.
UNLOCK OFFER- EUR/USD has been extending its losses as the dollar lifted its head again.
- A US bond auction and Fed speakers hold the key to the next moves.
- Wednesday's four-hour chart is pointing to further falls for the pair.
The greenback comeback is alive and kicking – EUR/USD has already dropped some 60 pips from the peak of 1.2222, and more may be in store. The dollar is gaining ground as Treasury yields stabilize from Tuesday's fall. How low can the pair go?
There are three keys to the next move:
1) 30-year bond auction: The US currency dived on Tuesday after investors rushed to buy ten-year Treasuries. The consequent fall in yields triggered the downfall – צשלןמע Wednesday's 30-year auction more important than usual. High demand could weigh on the greenback, but long-term debt could attract less enthusiasm.
2) Fed speeches: Federal Reserve Governor Lael Brainard and Vice-Chairman Richard Claudia will both speak later in the day. The two permanent voters on the bank's committee may provide guidance about the Fed's bond-buying plans. If they mention tapering – even by denying it – the dollar has room to advance. Fewer dollars printed mean higher yields and a stronger dollar.
3) The Beige Book: Two weeks before the Fed announces its rate decision, it publishes a document consisting of anecdotal reports from its regions. If the report – usually a low key event – includes optimism about fiscal stimulus and the vaccine, it would also boost the greenback.
What about coronavirus? As mentioned earlier, the US is ahead of Europe in vaccinations, and that is unlikely to change anytime soon. That also gives the greenback an edge. US inflation figures, which marginally beat with 1.4%, add a tad more to the case for favoring the world's reserve currency.
Five factors moving the US dollar in 2021 and not necessarily to the downside
EUR/USD Technical Analysis
Euro/dollar is slipping below the 200 Simple Moving Average on the four-hour chart and downside momentum is intensifying – showing that bears are gaining ground. The Relative Strength Index is above 30, thus outside oversold conditions.
Critical support awaits at 1.2125 – the triple-bottom initially tackled in mid-December and tackled in recent days. There are several support lines below, but these are weaker – 1.21, 1.2075, 1.2160 and 1.2040.
Some resistance awaits at 1.2180, which temporarily capped EUR/USD on Tuesday. It is followed by 1.2222, the recent high, followed by 1.2240, which provided support last week.
EUR/USD Price Forecast 2021: Euro-dollar long-term bullish breakout points to 1.2750
- EUR/USD has been extending its losses as the dollar lifted its head again.
- A US bond auction and Fed speakers hold the key to the next moves.
- Wednesday's four-hour chart is pointing to further falls for the pair.
The greenback comeback is alive and kicking – EUR/USD has already dropped some 60 pips from the peak of 1.2222, and more may be in store. The dollar is gaining ground as Treasury yields stabilize from Tuesday's fall. How low can the pair go?
There are three keys to the next move:
1) 30-year bond auction: The US currency dived on Tuesday after investors rushed to buy ten-year Treasuries. The consequent fall in yields triggered the downfall – צשלןמע Wednesday's 30-year auction more important than usual. High demand could weigh on the greenback, but long-term debt could attract less enthusiasm.
2) Fed speeches: Federal Reserve Governor Lael Brainard and Vice-Chairman Richard Claudia will both speak later in the day. The two permanent voters on the bank's committee may provide guidance about the Fed's bond-buying plans. If they mention tapering – even by denying it – the dollar has room to advance. Fewer dollars printed mean higher yields and a stronger dollar.
3) The Beige Book: Two weeks before the Fed announces its rate decision, it publishes a document consisting of anecdotal reports from its regions. If the report – usually a low key event – includes optimism about fiscal stimulus and the vaccine, it would also boost the greenback.
What about coronavirus? As mentioned earlier, the US is ahead of Europe in vaccinations, and that is unlikely to change anytime soon. That also gives the greenback an edge. US inflation figures, which marginally beat with 1.4%, add a tad more to the case for favoring the world's reserve currency.
Five factors moving the US dollar in 2021 and not necessarily to the downside
EUR/USD Technical Analysis
Euro/dollar is slipping below the 200 Simple Moving Average on the four-hour chart and downside momentum is intensifying – showing that bears are gaining ground. The Relative Strength Index is above 30, thus outside oversold conditions.
Critical support awaits at 1.2125 – the triple-bottom initially tackled in mid-December and tackled in recent days. There are several support lines below, but these are weaker – 1.21, 1.2075, 1.2160 and 1.2040.
Some resistance awaits at 1.2180, which temporarily capped EUR/USD on Tuesday. It is followed by 1.2222, the recent high, followed by 1.2240, which provided support last week.
EUR/USD Price Forecast 2021: Euro-dollar long-term bullish breakout points to 1.2750
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.