EUR/USD Forecast: The 2021 low near 1.2050 is expected to hold
- EUR/USD appears to have moved into a consolidative theme.
- The YTD lows in the mid-1.2000s emerge as a decent support.
The single currency navigates within a narrow range so far in the second half of the week, with occasional bouts of strength in EUR/USD limited by the recent weekly peaks in the 1.2200 neighbourhood.
Furthermore, any upside bias in EUR/USD looks subdued, particularly following recent comments from ECB officials that suggest that market participants could be underestimating the ability of the central bank to relax further the monetary conditions in the bloc, although a deeper move into the negative territory when comes to interest rates looks unlikely.
On the more upbeat side, if the vaccine rollout manages to pick up pace, then the growth prospects for the whole region should improve noticeably in the medium-term, all helped at the same time by the palpable probability of further stimulus in the US economy under the Biden’s administration (albeit less than the original $1.9 trillion package).
Near-term Price Outlook
The inability of bulls to push EUR/USD past recent tops around 1.2200 should spark some consolidation in the short-term horizon. This idea is reinforced by the RSI navigating the proximity of the 50 level. A sustainable move beyond this area should pave the way for a test of the so far YTD peaks around 1.2350 (January 6). On the opposite side, the yearly lows in the mid-1.2000s (January 18) are expected to hold bouts of selling pressure. Further south of this level carries the potential to trigger a deeper pullback to, initially, the Fibo retracement (of the November-January rally) at 1.1976.
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Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
