EUR/USD Weekly Outlook – January 27, 2021

Last Updated on January 27, 2021

EURUSD Forex Forecast


Last week’s bullish close of the Euro against the Sterling is currently challenged as the EURGBP resumed a four-week decline in the exchange rate against the Euro.

The Sterling continues to show strength against the Euro and Greenback as we enter a new week.

The USD is currently the loser among the three top traded currencies across US binary options trading sites, as the Euro increased against the USD by about 0.5% on Tuesday.

Speculations on a massive US stimulus package cause an increase in market risk sentiment, with the GBP Great British pound being the overall winner.

Read on for more analysis of the Euro and USD. 

EURO and US News

The USD maintains a stable outlook given the US Fed meeting scheduled for Tuesday and Wednesday.

Uncertainties from the US stimulus package spreads mixed signals across global stock markets.

A surge in coronavirus infections and concerns towards US stimulus resulted in an overnight consolidation of the US Dollar and mixed signals in the Wall Street session.

Shares in Europe slumps over expectations of weak French and German GDP reports.

A cooling of bullish sentiment is anticipated as the US, Germany, and France are expected to release their Q4 GDP data. Policymakers in the US are also likely to open the monetary faucet until the FOMC meeting on Tuesday and Wednesday.

On Wall Street, stocks like IXIC Nasdaq Index gained 0.69% setting new record highs in hopes of massive earnings coming from mega-cap tech companies. The SPX S&P 500 Index also added 0.36%, while the DJI Dow Jones Industrial Average slid by 0.12%.

Tighter restrictions from COVID19   led to a slump in European stocks to around their two-week low.

STOXX 600 Index dropped 0.8% lower, after making gains earlier. The DB1 DAX, UK100 FTSE, PX1 CAC40 all lost 1.7%, 0.8%, and 1.6% respectively.

Washington becomes a focus for investors following US lawmakers’ agreement to deploy vaccines to Americans a priority.

According to Christopher Grisanti, Mai Capital Managements’ chief equity strategist, everyone’s question is the amount to be approved for the stimulus package and when.

Tracking a basket of currencies, the USD Index increased by about 0.1%, while the EURUSD was down 0.3%.

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

EURUSD Technical Analysis

Monthly-MN Chart

EURUSD Monthly Chart - January 27 2021

As coronavirus cases increase, investors generally assumed a risk-averse position towards the US Dollar ahead of this week’s US Fed policy meeting.

The EURUSD still maintains a potential bearish outlook after a bearish divergence build-up on the monthly chart overview.

The pair may correct the Euro gains towards the 1.18808 support in the long term.

Weekly Chart Bullish

EURUSD Weekly Chart - January 27 2021

Weekly Resistance Level: 1.240

Weekly Support Level: 1.20114, 1.19207, 1.12430, 1.16124

The EURUSD still maintains a potential bearish outlook after a bearish divergence build-up on the monthly chart overview.

The pair may correct the Euro gains towards the 1.18808 support in the long term.

Following a similar path as the monthly time frame, the weekly chart bearish divergence stays solid, although the EURUSD exchange rate may find support at the MA-10 level.

We may see an advance of the uptrend if the bulls drive the RSI above the level-70.

Daily Chart Projections: Bullish 

EURUSD Daily Chart - January 27 2021

Daily Resistance Level: 1.240, 1.21896

Daily Support Level: 1.18003, 1.20591, 1.21299

Rounding up on the daily-TF, the relative strength Index (4) enters the oversold area for the first time since it exited on 03 Nov ’20, signaling the start of a bearish trend.

A recent collapse of bullish-Acc support 1.21516 shows that we should prepare for a mid-term price decline.

Bullish Scenario:

Waiting for a price correction around the 1.206 level may serve as a starting point to consider scaling into the up direction if bullish candlestick patterns are formed at the daily-TF level. 

However, we may see an extended price correction on the monthly chart.

Bearish Scenario:

We anticipate a short term short sell opportunity on the daily time frame as the EURUSD breaks below the significant 1.21516 support. However, the 1.250591 support may prove difficult to break.

Conclusion and Weekly Price Objectives

As we enter the last week of the month, a bearish monthly candlestick close on the EURGBP along with a decline in the Greenback should increase demand for the Euro.

We can still look out for short term opportunities to take a sell position from the intraday time frames.

James S. Martin
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