EUR/USD Extends Weekly Losses, Support In View - Forex News by FX Leaders
EUR/USD

EUR/USD Extends Weekly Losses, Support In View

Posted Tuesday, February 2, 2021 by
Shain Vernier • 2 min read

The Greenback has been on a tear this week, posting nice gains across the majors. One of the key movers has been the EUR/USD (-0.33%). Rates have broken beneath weekly downside support to open February. Are the tides finally turning against the current bullish trend? 

In addition to the EUR/USD , today has brought significant action to the AUD/USD (-0.43%), USD/CAD (-0.25%), and the USD/CHF (+0.20%). As of yet, the stronger USD is somewhat of a mystery. More than likely, we are looking at a case of institutional traders rebalancing positions as the new calendar month commences. However, two political stories may be boosting participation: 

  • Stimulus: COVID-19 bailout negotiations between Republican and Democratic leadership have progressed. Reports are circulating that a reduced relief package may be passed this month, but far short of the $1.9 trillion proposed by the Biden White House. Currently, the talks are spurring optimism on the financial front.
  • Trump Impeachment: The second impeachment trial of former POTUS Donald Trump is due to begin next week. While this action won’t impact the markets, it may tie up Congress for a considerable period. If a long Senatorial trial is conducted, passage of another COVID-19 stimulus package may be delayed until March or April.

Let’s dig into the EUR/USD weekly technicals and see if we can spot a trade or two.

EUR/USD Tests Weekly Uptrend

The weekly chart below gives us a good look at the intermediate-term uptrend in the EUR/USD. Now, rates have broken below the Weekly SMA for the first time since mid-November.

EUR/USD, Weekly Chart
EUR/USD, Weekly Chart

Here are the key levels to watch in this market until the weekend break:

  • Resistance(1): Weekly SMA, 1.2084
  • Support(1): Bollinger MP, 1.1947
  • Support(2): 62% Macro Wave, 1.1887

Bottom Line: If the EUR/USD continues its bearish ways, a buying opportunity may set up later this week. Ahead of Friday’s closing bell, I’ll have buy orders in the queue from 1.1959. With an initial stop loss at 1.1919, this trade produces 40 pips on a standard 1:1 risk vs reward ratio.

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