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#1 14-12-2020 14:28:20

johnedward
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From: Paris - France
Registered: 21-12-2009
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EUR/USD: pressure remains to the upside in the short term

EUR/USD: pressure remains to the upside in the short term


The eur/usd currency pair continues its neutral evolution since its last short term high in the first week of the month at levels close to the 1.2180 resistance zone.

On the EUR side: Current macroeconomic factors favour a continuation of the upward movement. Indeed, the persistent optimism concerning the forthcoming arrival of a vaccine which would make it possible to control the virus despite certain setbacks on the part of Sanofi, the prospects of a forthcoming world economic recovery by 2021-2022, as well as a reduction in the protectionist tendencies of certain states concerning trade could contribute to supporting the single currency or even provoke a continuation of the upward movement. The recent agreement on the European Union's economic budget for next year also gives greater visibility, which helps to reassure investors about the medium-term outlook.

On the USD side: the virus situation is still hitting the USA with full force. According to the latest available data from the Johns Hopkins University, whose work is an authority on the subject, the United States remains to this day the most bereaved country on the planet, with a number of deaths approaching 295,000. The number of new daily cases still regularly exceeds 190,000. The economy could weaken further, but the interventions of the FED could help to limit this weakening, which remains a rather bearish factor for the dollar.

Against this backdrop, it would appear that all of these factors argue for a continuation of the upward movement of the EUR/USD. However, it would appear that put options are attracting more and more investors who would like to protect themselves from a decline in the currency pair before the end of the year.

In addition, Germany's decision to apply a hard lockdown to avoid an outbreak during the Christmas holidays could weigh on the euro. PMI figures to be released later this week may confirm some fragility.

KEY CHART ELEMENTS
In this context, in the absence of a signal for a bearish turnaround, the short-term trend remains upward despite numerous weakening signals, and a continuation of the upward trend seems possible towards the next resistance at 1.2229 if the current resistance at 1.2179 is broken. However, a breakout at 1.21 could send a bearish signal on this currency pair, in which case a bearish target would be aimed at a return to the psychological 1.20 zone.

MEDIUM TERM FORECAST
In view of the key chart factors we have mentioned, our opinion is neutral in the medium term on the pair's exchange rate.

We will maintain this neutral view as long as prices remain positioned between support at $1.2000 and resistance at $1.2155.

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