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EUR/USD Forecast: Corrective decline set to continue

EUR/USD Current Price: 1.2226

  • The dollar firmed up despite a terrible US Nonfarm Payroll report.
  • Equities and government debt yields advance on hopes for further fiscal stimulus.
  • EUR/USD is at risk of extending its decline over the upcoming sessions.

The EUR/USD pair closed the week with modest losses, as the greenback extended its advance on Friday. The pair settled above the 1.2200 level, with the greenback strengthening despite terrible US employment figures. The country released the December Nonfarm Payroll report, which showed that the country lost 140K job positions in December. The unemployment rate remained steady at 6.7%, better than the 6.8% anticipated.

Equities closed with gains, and US Treasury yields kept advancing, as markets rallied on hopes for additional stimulus. On Friday, President-elect Joe Biden called for immediate further fiscal support, including increased direct payments of $ 2,000. The pandemic has brutally spread across the US, reporting over 300K daily new cases in one day by the end of the week.

This Monday, the EU will publish January Sentix Investor Confidence, foreseen at 0 from -2.7 in the previous month. The US won’t release relevant macroeconomic figures.

EUR/USD short-term technical outlook

The EUR/USD pair has fallen for a second consecutive day, but the daily chart shows that the price is hovering around a bullish 20 SMA, and far above the larger ones, somehow suggesting that the latest decline is corrective. Technical indicators head firmly lower, the Momentum crossing its midline and the RSI around 54, indicating that the decline may continue. The risk is skewed to the downside in the 4-hour chart, as technical indicators hold at recent lows near oversold readings, as the pair develops below its 100 SMA for the first time since early November.

Support levels: 1.2190 1.2140 1.2100

Resistance levels: 1.2230 1.2285 1.2340

View Live Chart for the EUR/USD

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Author

Valeria Bednarik

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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