EUR/USD Weekly Outlook – February 24, 2021

Last Updated on February 25, 2021

EURUSD Forex Outlook

Introduction

According to Pocket Option analysts, a drop in tech stocks and growth in value stocks, crude oil, and copper indicates that investors are shifting interests into assets that are anticipated to do well as global economies make for a comeback.

He further pointed out that the recent slump in equity warns investors that they must heed to risks and avoid being reckless and sucked in by extreme market highs.

Let’s look at the EURUSD charts and other news events as they drive the exchange rate of the EURUSD on FX trading broker platforms.

EURO and US News

The Greenback slumps against the Euro, GBP, and commodities following a shift in traders’ focus on if the coronavirus vaccinations, economic growth expectations, and higher inflation could lead to an increase in bond yields.

The DXY USD Index dropped by 0.07% on Monday and resumed a downtrend set since February.

In a statement by Western Union Business Solutions, Joe Manimbo, the USD continues to decline following US data releases.

A continuous decline in US employment now leads to a weakness of dollar gains as the markets see a fluctuation of jobs data, which may lead to the Fed lowering interest rates.

The Euro climbed against the Greenback to reach the 1.2162 USD mark. 

Released data on Monday shows growth in German business morale, more significant than expected in February.

Analysts look into speculations on a post-lockdown boom for the Eurozone and US to be hinged on which nation has the first-mover advantage on deploying vaccines.

The GBP gained 0.5% to reach 1.4066USD, the highest peak since April 2018, following Prime Minister Boris Johnson’s announcements on paths to exit lockdowns as the UK provided COVID19 vaccines.

Commodity currencies like the AUD, CAD show strength against the US dollar, and the trend may continue, according to Daiwa Securities FX strategist Yukio Ishizuki.

On Monday, Australia started a mass COVID19 vaccine program to eradicate local cases for three days in a row, boosting the Aussie.

Again this week, Monday, Bitcoin, the number one crypto-asset by market cap, slumped by roughly 16% to trade as low as 47400USD.

EURUSD Technical Analysis

EUR vs. USD Long-term Overview: Bullish Swing in resistance Zone

Monthly Chart

EURUSD Monthly Chart (TradingView) - 28th february 2021

The bearish divergence on the monthly time frame stays intact for now; on the other hand, the Greenback’s further weakness may force the EURUSD exchange rate to advance more in-depth into the 1.25557 and 1.21544 resistance areas.

Weekly Chart Bullish

Weekly Resistance Level: 1.23497

Weekly Support Level: 1.19521, 

The recent technical buildup of technical chart patterns on the DXY USD Index’s weekly chart hints that the US Dollar may be losing its steam and continuing its bearish decline.

The weekly chart of the EURUSD is also showing similar chart structures as the exchange rate finds support with the ten and twenty Moving Average.

Let’s not ignore the bearish divergence setup, though.

A breach of the 1.23495 resistance would negate the bearish divergence and send the exchange rate into new highs.

Daily Chart Projections: Bearish and symmetrical triangle 

EURUSD Daily Chart (TradingView) - 28th February 2021

Daily Resistance Level: 1.21801, 1.21695, 1.21896, 1.23495

Daily Support Level: 1.20230, 1.19521

The bulls set a new high on the daily time frame at 1.21801, a level more significant than the 1.21695, indicating that we should expect a mid-term surge in the EURUSD exchange rate.

Bullish Scenario:

The bullish campaign should continue if the EURUSD close above 1.21695 resistance from a weekly chart perspective.

Bearish Scenario:

Conversely, we should expect a plunge in the EURUSD exchange rate if the relative strength index sinks below the level-30 and the price closes below the 1.19521 support area.

Conclusion and Weekly Price Objectives

The increasing likelihood that Congress will pass President Joe Biden’s $1.9 trillion stimulus plan brings worries concerning a likely hike in inflation. 

As those expectations rise, so has the so-called reflation trade’s reputation, which has dragged the US dollar under this month.

If the bearish divergence on the higher time frames of the EURUSD holds, we may see a mid-term gain in the USD exchange rate.

James S. Martin
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