EUR/USD Forecast: Fears limit demand for high-yielding assets
EUR/USD Current Price: 1.2134
- Equities closed in the red amid persistent turmoil related to individual investors.
- Vaccine-related news soured the mood amid possible reduced effectiveness.
- EUR/USD is technically neutral, could turn bearish below 1.2060.
The EUR/USD pair saw little action on Friday, ending the week with modest losses, but within familiar levels in the 1.2130 price zone. Investors’ attention remained on equities, these last subject to the turmoil related to the $GME scandal, and brokerage apps halting trading. Global indexes fell at the end of the week, with Wall Street reaching fresh January lows.
The dismal market mood was exacerbated by vaccine-related headlines, as the one-shoot from Johnson & Johnson has proven 66% effective in phase three trials, while Pfizer’s CEO said that "there is a high possibility that future variants will elude vaccines." On a positive note, the number of new coronavirus contagions keeps decreasing globally after peaking at 845K early in January to roughly 500K reported on Saturday. Despite delayed delivery, vaccines are rolling out and hopes are that immunity will boost growth in the second half of this year.
Data wise, Germany published the preliminary estimate of Q4 GDP, which came in slightly better than anticipated at 0.1%. The US published December core PCE inflation that rose 1.5% YoY from 1.4% in the previous month. This Monday, Markit will publish the final readings of its Manufacturing PMI for January, while the US will release the official January ISM Manufacturing PMI, foreseen at 59.5 from 69.7 previously.
EUR/USD short-term technical outlook
The EUR/USD pair has spent the week trading between Fibonacci levels. It found support around the 38.2% retracement of the November/January rally at 1.2060, while sellers defended the 23.6% retracement of the same advance at around 1.2175. In the daily chart, the pair is neutral-to-bearish, as the 20 SMA caps advanced, converging with the mentioned Fibonacci resistance while technical indicators aim modestly higher but below their midlines. In the near-term, and according to the 4-hour chart, the upside seems limited, as the pair trades between bearish moving averages, while technical indicators lack directional momentum just above their midlines.
Support levels: 1.2095 1.2060 1.2025
Resistance levels: 1.2180 1.2225 1.2260
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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.
