EUR/USD Forecast: Bears hold the grip, critical challenge at 1.2000

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.2078

Renewed coronavirus concerns and poor macroeconomic data spurred risk-off.
The US starts the week with a bank holiday, celebrating the Martin L. King day.
EUR/USD is firmly bearish and poised to defy bull’s determination around 1.2000.

The greenback firmed up at the end of the week, closing it with substantial gains against most major rivals. The EUR/USD pair fell to 1.2075, ending the week around this last. The catalyst for the latest bout of risk-aversion was news indicating that distribution of the Pfizer vaccine will be delayed in the EU. Worse than expected data fueled the dismal mood, reminding speculative interest the consequences of the pandemic over economic developments.

On Friday, the EU published the November Trade Balance, which posted a seasonally adjusted surplus of €25.1 billion. The US released December Retail Sales, which came in at -0.7%, much worse than anticipated. The core reading, printed at -1.9% vs an expected 0.1% advance. Also, the preliminary estimate of the January Michigan Consumer Sentiment Index came in at 79.2 down from 80.7. At the beginning of the week, the macroeconomic calendar will be light for these two economies, with no data coming from the EU and as the US celebrates the Martin L. King holiday.

EUR/USD short-term technical outlook

The EUR/USD pair is technically bearish according to the daily chart, although in the wider view the movement is still corrective. The pair has accelerated south after being incapable of recovering above a now flat 20 SMA, while technical indicators head firmly lower within negative levels. In the near-term and according to the 4-hour chart, the risk is also skewed to the downside, as the pair develops below all of its moving averages white technical indicators consolidate their latest losses near oversold readings. Bears will take over on a break below the critical 1.2000 threshold. 1.2058, the low from December 9 is the immediate support, ahead of the round figure.

Support levels: 1.2055 1.2010 1.1970

Resistance levels: 1.2130 1.2180 1.2225

View Live Chart for the EUR/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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