EUR/USD Forecast: Bear attack on 1.20 looks imminent as markets see glass half-empty


  • EUR/USD has dropped off the highs, surrendering to dollar strength.
  • Concerns about a patchy recovery may push the currency pair lower.
  • Tuesday's four-hour chart is showing that bears are gaining ground.

It is springtime and Europe is reopening to travelers – yet the upbeat news coming from Brussels is insufficient to help the euro recover against the resurging dollar. The old continent's vaccination campaign is picking up speed, but that seems to already be in the price.

Instead, markets seem to focus on some sober comments from Jerome Powell, Chair of the Federal Reserve. Despite acknowledging America's recovery, the powerful central banker characterized this upswing as "patchy" and stressed that unemployment at among those earning less is still elevated. 

Another insight into an uneven recovery came from the ISM Manufacturing Purchasing Managers' Index for April. After hitting multi-year highs in March, the forward-looking gauge fell from 64.7 to 60.7. Details of the report pointed to supply chain issues and rising prices.

The comeback from the pandemic could be too quick to handle and may require some cooling down. These worries are weighing on the market mood and pushing the safe-haven dollar higher. Will it continue? 

Overall, supply bottlenecks should be resolved and so should issues related to the virus. While the world is following the pictures from India with fear, America is set to expand its vaccination scheme to adolescents – and may already contribute more doses to other countries. However, in the shorter run, various issues will likely cause jitters, and that could push the greenback higher. 

EUR/USD Technical Analysis

Euro/dollar is suffering from downside momentum on the four-hour chart and remains capped by the 50 Simple Moving Average. On the other hand, it has bounced off the 100 SMA. 

Support awaits at 1.2015, the weekly low, and then by 1.1990 – a double-bottom and separator of ranges. Further below 1.1945 and 1.1920 are eyed.

Some resistance is at 1.2075, the weekly high, followed by 1.2117, the late-April swing high, before 1.2150, last month's peak. 

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

USD/JPY pops and drops on BoJ's expected hold

USD/JPY pops and drops on BoJ's expected hold

USD/JPY reverses a knee-jerk spike to 142.80 and returns to the red below 142.50 after the Bank of Japan announced on Friday that it maintained the short-term rate target in the range of 0.15%-0.25%, as widely expected. Governor Ueda's press conference is next in focus.  

USD/JPY News
AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD attacks 0.6800 in Friday's Asian trading, extending its gradual retreat after the PBOC unexpectedly left mortgage lending rates unchanged in September. A cautious market mood also adds to the weight on the Aussie. Fedspeak eyed. 

AUD/USD News
Gold consolidates near record high, bullish potential seems intact

Gold consolidates near record high, bullish potential seems intact

Gold price regained positive traction on Thursday and rallied back closer to the all-time peak touched the previous day in reaction to the Federal Reserve's decision to start the policy easing cycle with an oversized rate cut.

Gold News
Ethereum rallies over 6% following decision to split Pectra upgrade into two phases

Ethereum rallies over 6% following decision to split Pectra upgrade into two phases

In its Consensus Layer Call on Thursday, Ethereum developers decided to split the upcoming Pectra upgrade into two batches. The decision follows concerns about potential risks in shipping the previously approved series of Ethereum improvement proposals.

Read more
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures