EUR/USD: Three reasons to suspect a correction is coming

EUR/USD has been rising thanks to dollar weakness, but the Fed's Powell may change that. Furthermore, Europe's depressing covid situation may return to weighing on the euro while Wednesday's 4-hour chart is pointing to overbought conditions, FXStreet’s Analyst Yohay Elam reports.

Key quotes

“Jerome Powell, Chairman of the Federal Reserve, is set to deliver a speech on the labor market later in the day. The powerful central banker may use his public appearance to urge lawmakers to act. Investors may respond to such a reminder by selling bonds in expectations of higher debt issuance, boosting the dollar.”

“The EU aims to vaccinate 70% of adults through the summer – a goal that looks elusive with every day that passes and immunization figures only slowly climb. Deliveries of doses are scheduled to arrive in the old continent during February, but the quantities are low and distribution sluggish.”

“The Relative Strength Index is just above 70 – in overbought territory. This development indicates a correction. Support awaits at 1.2095, which is where the 100 SMA hits the price. It is followed by 1.2050, a robust separator of ranges. Resistance awaits at 1.2145, where the 200 SMA awaits the pair, followed by 1.2190, a stubborn cap from mid-January.”