EUR/USD Weekly Outlook – January 21, 2021

Last Updated on January 22, 2021

EURUSD Forex Forecast

Introduction

The Great British pound beats the Euro for four weeks now, following a temporal delay of COVID-19 vaccines in the Eurozone, among other events. After showing signs of recovery last week, the USD Index could not hold on to its gains as the technical charts show a substantial likelihood of a resumed downward price plunge.

The EURUSD shows weakness against the Greenback as revealed on global FX trading broker platforms such as BinaryCent.

Read on for more details into the events and chart patterns driving the EURUSD exchange rates.

EURO and US News

This week Wednesday, the Greenback dominates the Euro, following an increase in the risk of a prolonged lockdown to avert the expanse of COVID-19 and uncertainties with vaccine rollouts.

Worries of a mutated variant of the coronavirus weigh on countries in the Eurozone, with fears of more poignant lockdowns to come.

In North-Rhine Westphalia, Germany, statements of delay in new vaccination centers owing to a slowing of vaccine delivery from Pfizer and Biotech (German partner). 

The STOXX 60 (EUR) climbed by 0.5%, as the DB1 Index (Frankfurt) and PX1 (Paris) also gained 0.5% and 0.2%.

Joe Manimbo of Western Union Business Solutions commented that the risks of a prolonged lockdown in the Eurozone heightens threats of a double-dip recession, consequently a slump in the Euro.

Riskier currencies were favored by investors ahead of the US President-elect Joe Biden’s inauguration in Washington.

Analysts anticipate a push in stimulus approximated to two trillion USD, speeding up the US economy’s recovery.

Some investors still expect a prolonged weakness of the USD, even after a rise last week.

We observe a dip in US Treasury bonds as investors speculate on more US stimulus following the new Joe Biden Administration.

Last week, President Joe Biden proposed a 1.9 trillion USD stimulus package to advance vaccine distribution and the US economy.

According to Janet Yellen, a nominee for US Treasury Secretary, lawmakers should be proactive towards saving the economy and leave debut worries to later.

She went on to state that tax increase would come second after pandemic relief.

EURUSD Technical Analysis

EUR vs. USD Long-term Overview: Bullish Slowing Swing

Monthly-MN Chart

EURUSD Monthly Chart - January 21 2021

We notice a buildup of bearish divergence on the monthly-TF of the EUR vs. US Dollar upon entering the Feb 01 ’18 and Mar 01 ’18 resistance area.

The move indicates a likely trend reversal of the upswing, or a mere price correction to the 10-Monthly Moving Average, which is somewhere above theo2 March ’20 resistance, now turned support.

Weekly Chart Bullish

EURUSD Weekly Chart - January 21 2021

Weekly Resistance Level: 1.240

Weekly Support Level: 1.20114, 1.19207, 1.12430, 1.16124

Like the monthly-TF, the bulls on the weekly charts are quickly cashing out on their gains following increase uncertainties from the recent lockdowns and a decline in Euro Stoxx.

Last week’s collapse of 1.21931 support should also send the EUR/USD exchange rate into lower price regions, say around the 1.16124 level.

Daily Chart Projections: Bullish 

EURUSD Daily Chart - January 21 2021

Daily Resistance Level: 1.240, 1.2253, 1.21299

Daily Support Level: 1.20591

The above daily time frame also shows levels where the bulls slowly take out their orders, which then translates into a bearish divergence sequence.

Although the exchange rate trades around the MA-10, we expect a further slump in the EUR/USD price now that the RSI trades in the oversold area.

Bullish Scenario:

At the current level of the EURUSD exchange rate, an upward bias is most likely at the intraday level, with the higher time frame screaming bear.  

A price close above the 1.20869 on the H4 –TF confirms an intraday resistance and a 0.65% price hike in the short term.

Bearish Scenario:

The EUR/USD shows a robust bearish presence from the daily time frame, up to the monthly time frame, with substantial bearish divergence, breach of significant support, and trading within resistance territories.

Conclusion and Weekly Price Objectives

Yesterday’s break (Jan 20 ’21) of buying levels on the EURGBP shows that we should expect a weaker EUR against the Great British pound. 

The Greenback may take advantage of this to drive the EURUSD exchange rates to new lows, given the level of uncertainties in the Eurozone.

James S. Martin
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