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EUR/USD Forecast: Trading At Fresh Yearly Lows Without Signs Of Bearish Exhaustion

Valeria Bednarik - Chief Analyst at FXStreet
·2 min read

EUR/USD Current Price: 1.2018

  • Progress in US stimulus talks boosted equities and the greenback.

  • The EU preliminary estimate of Q4 GDP came in at -0.7%, better than the -1.2% expected.

  • EUR/USD is trading at fresh yearly lows without signs of bearish exhaustion.

The EUR/USD pair plunged to 1.2011, its lowest for this 2021, as the dollar kept rallying alongside Wall Street, on progress related to the next US stimulus package. Optimism mounted as initial talks between US President Joe Biden and Republican senators were productive, according to Senator Susan Collins. Nevertheless, there’s a huge difference between Biden’s $1.9 trillion package and Republicans´ counteroffer of roughly $ 600 billion.

The EU published the preliminary estimate of the Q4 Gross Domestic Product, which came in at -0.7%, better than the -1.2% expected. The annual comparison resulted at -5.1%, also beating the -5.4% forecast. The US released the January ISM-NY Business Conditions Index, which retreated from 61.3 to 51.2, and February IBD/TIPP Economic Optimism improved to 51.9 from 50.1.

This Wednesday, Markit will publish the final versions of its Services PMIs for the EU and the US, while the later will release the official ISM Services PMI, foreseen at 56.8 in January from 57.7 in December. The US will also unveil the ADP survey on private jobs’ creation, foreseen at 45K.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair is trading near the mentioned daily low as the day comes to an end, poised to extend its decline after breaking below the 38.2% retracement of the November/January rally at 1.2060. In the 4-hour chart, the pair has accelerated its slump below firmly bearish moving averages, while technical indicators have reached oversold levels but without signs of bearish exhaustion.

Support levels: 1.2010 1.1970 1.1925

Resistance levels: 1.2060 1.2095 1.2140

View Live Chart for the EUR/USD

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