Last Updated on December 28, 2020
EURUSD Forex Forecast
The EURUSD gapped lower on US binary options trading brokers following an increase in Brexit tensions and lockdown from a new coronavirus outbreak wave.
Can the bulls continue to sustain their control on the exchange rate?
Read on as we uncover significant chart patterns, levels, and news events that may maintain or sway the course of the EURUSD exchange rate.
The Euro slumped by roughly 0.2% after falling to its 10-day low. There are currently speculations that the current Covid19 is 70% contagious compared to the earlier outbreak.
A Reuters interview with Erik Bregar, Fx Strategy head at Exchange Bank of Canada, pointed at the recent wave of buying the dip strategy on the EUR/USD, as he considers Monday’s move to be a counter-trend.
According to Berenberg’s chief economist Schmieding Holger, the EUR’s strength is not anticipated to go through structural challenges than the GBP, which’s expected to face structural hurdles when Britain leaves the EU (deal or no deal).
A few days before Britain exits the EU, Wall Street and European shares slide lower as Europe cuts transport with Britain, leading to uncertainty among companies and families.
The European Stock Index STOXX slumped by about 2.3% over concerns of COVID19 tensions.
The USD increased against major currencies at the weeks open, following an increasing spread of new Covid19 cases in the UK, forced investors to take shelter in the Greenback.
The USD Index attained a 10-day high earlier today and later resumed the down move.
Also, this week, the Sterling GBP=D3 slumped to a 10-day low against the Euro and USD.
The coronavirus vaccine’s optimism reviving the global economy drove the USD Index to a two week high at 91.022. However, the bullish move could not be sustained as it left investors hanging after it later fell to as low as 0.17% at press time.
Truist Advisory Services market strategist Keith Lerner considers the recent price drop to be a Knee-jerk reaction to the news on increasing coronavirus in the UK.
Edward Moya, a senior market strategist at OANDA, looks into a Biden administration’s possibilities playing more strict and cautious measures that may limit economic activities.
Anticipated normalcy in the US economy by Q1 2021 may be extended further into 2021.
EUR vs. USD Long-term Objective: Bullish
EURUSD Technical Analysis
EURUSD: Monthly Chart
After rising by roughly 15.10% from the 02 March ’20 support to the current monthly high, we observe the EURUSD entering into the bearish resistance zone (1.25558 – 1.21545) and building up into a regular bearish divergence pattern.
The bears may assume control of the exchange rate at the closing price of December ’20.
EURUSD: Weekly Chart Bullish
The EURUSD gapped lower at the weekly open and quickly dipped below the 30 November ’20 high (1.21775), using the level as a springboard back to the upside.
The bulls continue to show dominance despite the early price slump this week. Let’s get a closer view of the daily time frame.
EURUSD Daily Chart Projections: Bullish
Daily Resistance Level: 1.22530
Daily Support Level: 1.20591, 1.18003, 1.17456, 1.16234
Coming down to the daily time frame, the bullish trend that started from 05 November ’20 continues to strengthen going forward as the price triggered buy-limit orders between the MA10 and MA20.
A breach of the 1.22530 resistance will signal to scale into the bullish trend.
The bulls’ influence should persist into the last days in December, after which we anticipate a slowing of the upward momentum.
A buildup of bullish divergence market structure on the daily, weekly, and monthly time frames of the USD Index (DXY) shows that we should anticipate a bearish move on the EURUSD, considering that it’s the most liquid currency pair.
Conclusion and Weekly Price Objectives
Although the USD Index shows signs of recovery for the Greenback, we continue to hold a bullish bias towards the EURUSD all through this week. However, while doing this, we suggest a short term holding time while in a long position as the US dollar is slowly showing strength.