EUR/USD Forecast: Bulls waiting for a catalyst to push it to 1.2340

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.2168

Mixed growth-related data and a dull ECB limited EUR’s gains.
The US will release this week the first estimate of Q4 GDP.
EUR/USD is neutral-to-bullish in the near-term, needs to advance beyond 1.2225.

The EUR/USD pair extended its advance on Friday, reaching a high of 1.2189, to close the week with gains around the 1.2170 mark. Market players were left without a clear catalyst, after a dull ECB and mixed macroeconomic data. Markit released the preliminary estimates of its January PMIs, which showed that economic activity contracted further, as the EU Markit Composite PMI came in at 47.5, below the previous 49.1. The services sector suffered the most from the latest lockdown, as services PMI through Europe were below the 50 mark, indicating contraction.

US PMIs, on the contrary, resulted better than anticipated and above December figures, but fell short to boost optimism, as equities edged mostly lower. Meanwhile, coronavirus-related concerns continue to weigh on sentiment. New strains that put at doubt the vaccines’ effectiveness, delays in production, and persistent increases in contagions, were behind such concerns.

This Monday, Germany will publish the January IFO survey, while the US won’t offer relevant data. The focus shifts to later into the week, when the US will publish the preliminary estimate of Q4 GDP and the Federal Reserve will announce its decision monetary policy.

EUR/USD short-term technical outlook

The EUR/USD pair settled around the 23.6% retracement of its November/January rally, and the daily chart shows that the bullish potential remains limited. The pair held below a flat 20 SMA, which stands flat a handful of pips above the current level. The RSI is directionless within neutral levels while the Momentum retreats after failing to retake bullish ground. In the near-term and according to the 4-hour chart, the pair is neutral-to-bullish, trapped between moving averages but with technical indicators aiming higher within positive levels.

Support levels: 1.2150 1.2100 1.2060

Resistance levels: 1.2225 1.2260 1.2310

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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