EUR/USD Weekly Outlook – March 12, 2021

Last Updated on March 12, 2021

EURUSD Forex Forecast

Introduction

The CPI news release will be of interest to the forex broker as the inflation number will be the focal-point for Pocket Option investors and traders during the news released. This outcome will determine the next step to be taken by the central bank.

The ECB decision about its monetary policy in the coming days will help investors, traders to know how the state of the economy is in the Euro aid the covid19 crisis.

EURO and US News

INTEREST RATE STATEMENT

The ECB uses the monetary policy to communicate with traders, investors, and other forex brokers regarding the European economy, what influences their decision on the interest rate, and possible steps to be taken. 

The Covid-19 vaccine was meant to help and build confidence in the European economy to restore the economy to its full potentials; however, speculators see the low pace at which it is being distributed will make the recovery process of EU lag compare to other counties.

If the statements are more hawkish from the policymakers, it is suitable for the Euro, but it will mean a bearish move for the currency if it is dovish.

The US CPI m/m

Forecast 0.4% pervious 0.3%

Bureau of Labor Statistics is responsible for the news that will trigger the central bank’s decision to either increase the interest rate or leave it; inflation is significant to currency valuation. 

This process is done by comparing prices of services and goods purchased by consumers within a certain period, mostly every 16days into the new month. 

The information helps traders, investors, and other financial institutions understand the general perception of price concerning goods and services within the country in a specific time duration.

A consumer price is also a tool for monetary policymakers as they observe inflation in circulation and how it’s affecting the currency. As part of the central banks’ mandate, it raises interest rates when prices increase for currency evaluation.

This information helps traders, investors, and other financial institutions understand the general perception of price with goods and services within the country within a specific time. 

A higher result than forecast will be good for the US dollar, while a lower data will weaken the currency.

EURUSD Price Analysis

THE EUR vs. USD Long-term Overview: Bearish move starts in resistance Zone

Monthly Chart

EURUSD monthly Chart ( trading view)

Resistance levels: 1.25559, 1.21545, 1.18808, 1.14950

Support levels: 1.10292, 1.08288 

The US dollar is still building momentum against the Euro, having retested the previous resistance zones that rejected the bullish run about 3years ago. In March, we have seen the US dollar gain about 2.30% since it began; the dollar index shows strength for the currency. 

It could also be related to the favorable news of the non-farm payroll that came out positively for the currency with higher data than the expected forecast. 

If the Bears can rally the price down below the resistance level of March 02, 2020, turned support, we are likely going to see the bears take the EURUSD down to the support levels of 1.10292 and 1.08288 (April 2020 and February 2017, respectively) we are expecting the Bulls to react from those zones.

 Weekly Chart Bullish

EURUSD weekly Chart ( trading view)

Weekly Resistance Level: 1.23497, 1.22431

Weekly Support Level: 1.19521, 1.12430

The EURUSD pair on the weekly chart is on a downtrend as you can see the lower highs and lower lows are building after the bearish divergence buildup of Jan 2021 was respected by the market. 

Therefore we have more sellers in the market than buyers in the market currently. However, the primary trend remains bullish until the low of September 2020 (1.16124) is taking out, which is the buyers’ and sellers’ psychological point on the weekly time frame.

As the price approaches the 1.16124 zones, we may get a bounce around that level. The bulls rejected the price before, and we may see that again before a breakout of the zone.  The Bulls are likely taking the price high from the support levels.

Daily Chart Projections: Bearish and symmetrical triangle 

EURUSD daily Chart ( trading view)

Daily Resistance Level:  1.21695, 1.21896, 1.23495, 1.21801

Daily Support Level: 1.20230, 1.19521, 1.18565

The US dollar made a gain of 2.91% from the resistance level of 1.21896 down to the support of 1.18565. 

The breakdown of bullish accumulation support of price at 1.21561 on February 26, 2021, led to a bearish rally, having rejected the price at the resistance zone of 1.21896 as of January 22, 2021. 

As at the time of research, the pair may likely have a correction to test previous support turned resistance at the 1.19521 resistance zone in the coming days.

As the price pulls back on the daily chart and the bullish momentum is sustained, we may see it pass through the February 05, 2021 levels to test the resistance zone of January 22, 2021, for a test or breakout above move.

Bullish Scenario:

The bullish trend is still in place, looking at the weekly and monthly time frames. 

At the moment, we can call the bearish move a correction until we see a complete reversal pattern on the weekly chart. 

We expect the uptrend to continue if the price closes above the 1.23497 high on the weekly time frame.

Bearish Scenario:

A bearish scenario is already built on the daily time frame as we can see lower highs and lower lows. Therefore, we expect a brief correction back towards the 1.19521 levels before continuing the bearish trend that will break and close below the low of 1.18565.

Conclusion and Weekly Price Objectives

The US dollar is technically going to be stronger than the Euro in the coming days. 

We see more sellers open short positions due to the positive news from the US government and what they are doing to curb the covid19 pandemic. 

We expect EURUSD to be bearish for a while after a correction phase is over on the daily time frame.

 

James S. Martin
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