EUR/USD Forecast: Bulls retain control, possible bearish corrective decline

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.2093

US ADP survey showed that the private sector added just 307K new positions in November.
COVID-19 stimulus talks in the US and the use of Pfizer’s vaccine in the UK lifted the mood.
EUR/USD retains its bullish stance, but overbought conditions may result in a bearish correction.

The EUR/USD pair kept rallying on Wednesday, reaching a fresh 2020 high of 1.2108. The common currency was among the best performers in a market led by sentiment. Hopes that the US Congress would resume negotiating a COVID-19 stimulus package, alongside Pfizer’s vaccine authorization in the UK, fueled investors´ mood. Brexit headlines, on the other hand, put a break to equities´ rally during the London session, which closed mixed.

Wall Street managed to bounce off daily lows, in spite of soft US data, supporting EUR/USD. The US published the November ADP survey on private job creation. According to it, private payrolls rose by 307K, below the 410K expected and the previous 365K. Earlier in the day, Germany published October Retail Sales, which surprised to the upside, surging 2.6% MoM and 8.2% YoY. The EU released the October Producer Price Index, which beat expectations rising by 0.4% in the month.

This Thursday, Markit will publish the final versions of its Services PMIs for the EU and the US. The Union will report October Retail Sales, while in the US, the focus will be on employment-related data and the official ISM Services PMI, expected at 56 from 56.6 in the previous month.

EUR/USD short-term technical outlook

The EUR/USD pair is trading near the 1.2100 figure, maintaining its bullish tone. The dollar is oversold, and a corrective recovery can’t be ruled out. Technically, the 4-hour chart indicates that there’s room for additional gains, as the pair further advanced above all of its moving averages, with the 20 SMA heading firmly north around 1.2010. Technical indicators have stabilized, the Momentum within positive levels and the RSI at 75, without signaling bullish exhaustion.

Support levels: 1.2060 1.2010 1.1970

Resistance levels: 1.2110 1.2140 1.2190

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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