Forex Forecast: 11 – 15 January 2021
EURUSD Rates Week in Review
Last week, our technical indicators suggested to go Long on the currency pair at or below 1.2250, setting a stop loss at 1.2150. The first opportunity to initiate a Long position in the EURUSD was this past Monday, where we could have bought the currency pair at 1.2225, selling it on Tuesday at 1.2305, for 0.65% gain. Tuesday, we could have bought it at 1.2248, selling it Wednesday at 1.2348, for 0.82% ROI. Today, Thursday, we could have bought it at 1.2247, selling it on a intraday trading at 1.2343, for an extra 0.78% trade profit.
The mob supporting President Donald Trump has failed in its coup attempt, and EURUSD will likely fall short of ending the broad rally. The world has been digesting the extraordinary events on Capitol Hill, a well organized group incited by the losing incumbent taking over parliament violently, and luckily failing to overturn the results. Congress certified Joe Biden as the winner early on Thursday.
Nevertheless, scenes reminiscent of the third world did little to sway markets as investors have seen the dramatic scenes as having no term impact on economics. The short physical capture of Congress has no impact, while the orderly takeover of the Senate by Democrats has a positive one.
Biden’s party secured effective control of the upper chamber after both Raphael Warnock and Jon Ossof won their runoff races in Georgia. That would enable Democrats to pass another generous stimulus package, yet probably insufficient to make market-unfriendly reforms. However, Democrats will only have a slim 51:50 majority.
While prospects of further government spending bolstered markets, the dollar reaction was mixed. On one hand, the safe-haven greenback suffered a sell-off, but that was quickly replaced by flows stemming from rising bond yields. Expectations of massive bond issuance to fund new expenditure, prompted investors to sell Treasuries. In turn, higher returns on US debt boosted the currency.
Nevertheless, any increase in the dollar may be temporary. It is essential to remember that the Federal Reserve is ready to buy more bonds if necessary. The Fed’s meeting minutes from the latest meeting showed some on the board are already eyeing additional monetary stimulus.
What could push the Fed into more action?
In the immediate term, the answer depends on the job market. ADP’s labor figures disappointed with a loss of 123,000 positions, contrary to an increase that was expected.
Five factors moving the US dollar in 2021 and not necessarily to the downside.
Will Friday’s official Nonfarm Payrolls also show a squeeze in hiring?
That remains an open question, but bad news for American workers could turn into good news for dollar bears on expectations for Fed action.
Thursday’s economic calendar features jobless claims for the last week of 2020 and the ISM Services Purchasing Managers’ Index for December, a hint for the NFP. Devastating figures could boost EURUSD, but there is a higher chance it would happen on Friday.
- ISM Services PMI Preview: Business optimism is fine but the dollar needs jobs
- US Initial Jobless Claims Preview: Rising unemployment undermines US recovery
Politics have somewhat overshadowed the pandemic that is raging on both sides of the Atlantic. COVID-19 cases, deaths on hospitalizations continue rising, with the US setting new highs on admissions.
In Europe, politicians are under pressure to accelerate the pace of vaccinations, which has been frustratingly slow. The European Medicines Agency (EMA) approved Moderna’s labs, but evidence of a concerted effort to vaccinate the population are still to be seen.
EURUSD is trading around 1.23 but off the highs. The dollar is rising alongside Treasury yields, amid expectations for broad stimulus under a unified Democratic government. Markets are shrugging off the storming of the Capitol. US data and coronavirus developments are eyed.
Eurodollar has been falling, but momentum on the above four-hour chart remains positive, and the currency pair trades above the 50 Simple Moving Average, hence, Bulls remain ahead.
Some support awaits at 1.2265, the daily low, followed by 1.2245, a low point early in the week, followed by 1.2210 and 1.2175.
Resistance is at 1.2310, the previous 2021 high, followed by 1.2350, which is emerging as a double top. The next cap is 1.24.
EURUSD Price Forecast 2021: Euro-dollar long-term bullish breakout points to 1.2750
For next week, as illustrated in the following 4-hour EURUSD chart, our technical analysis indicators appoint a major resistance at 1.24, therefore it suggests a strong reversal trend may be on the horizon, suggesting to initiate a short position at or above 1.24, setting a stop loss at 1.25, and setting a Long position at or below 1.22, setting a stop loss at 1.20.
As of 12:48 PM (GMT), the EURUSD was trading at 1.22717.
EUR to USD forecast for tomorrow: Euro to Dollar forecast on Friday, January, 8: exchange rate 1.2358 Dollars, maximum 1.2543, minimum 1.2173. EUR to USD forecast on Monday, January, 11: exchange rate 1.2408 Dollars, maximum 1.2594, minimum 1.2222. Euro to Dollar forecast on Tuesday, January, 12: exchange rate 1.2433 Dollars, maximum 1.2619, minimum 1.2247. EUR to USD forecast on Wednesday, January, 13: exchange rate 1.2433 Dollars, maximum 1.2619, minimum 1.2247.
In 1 week, Euro to Dollar forecast on Thursday, January, 14: exchange rate 1.2360 Dollars, maximum 1.2545, minimum 1.2175. EUR to USD forecast on Friday, January, 15: exchange rate 1.2405 Dollars, maximum 1.2591, minimum 1.2219. Euro to Dollar forecast on Monday, January, 18: exchange rate 1.2448 Dollars, maximum 1.2635, minimum 1.2261. EUR to USD forecast on Tuesday, January, 19: exchange rate 1.2447 Dollars, maximum 1.2634, minimum 1.2260. Euro to Dollar forecast on Wednesday, January, 20: exchange rate 1.2452 Dollars, maximum 1.2639, minimum 1.2265.
Disclosures: The material provided herein is for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any interests in the EUR/USD or any other securities. This overview may include or be based in part on projections, valuations, estimates and other financial data supplied by third parties, which has not been verified by Pedro Ferreira. Any information regarding projected or estimated investment returns are estimates only and should not be considered indicative of the actual results that may be realized or predictive of the performance of the EUR/USD or any underlying security. Further, Pedro Ferreira is not long or short in the currency pair. Past investment results of any underlying managers should not be viewed as indicative of future performance of the EUR/USD.