EUR/USD Violates Downward Channel – A Quick Intraday Outlook!

The EUR/USD closed at 1.21193 after placing a high of 1.21216 and a low of 1.20437. EUR/USD pair posted gains for the third consecutive sess

Arslan Butt•Wednesday, February 10, 2021•2 min read

The EUR/USD closed at 1.21193, after placing a high of 1.21216, and a low of 1.20437. The EUR/USD currency pair posted gains for the third consecutive session on Tuesday, amid the weakness of the broad-based US dollar and a rising risk sentiment in the market. Last week, the rally in the US dollar triggered a strong bearish momentum in the EUR/USD pair, dragging it to the lowest level in two months, close to 1.1954. However, this week, rising expectations in the US, for the promised stimulus measures, halted the risk rally in the greenback, weighing on the currency and triggering the bullish momentum in the EUR/USD pair.

The markets were taking profits from the recent gains in the US dollar, and as a result, the greenback saw heavy pressure. The US dollar was also weak across the market, due to the increased hopes for quick delivery of the US stimulus package. US lawmakers have a budget outline that could push US President Joe Biden’s proposed coronavirus relief package through Congress without Republican support, and this legislation is expected to be passed before March 15. This weighed on the local currency and added to the gains in the EUR/USD pair.

On the data front, from the European side, at 12:00 GMT, the German Trade Balance for December was released, indicating a rise to 16.1B, against the forecast of 14.2B, which supported the Euro and added to the gains in the EUR/USD pair. At 14:00 GMT, the Italian Industrial Production for December came in, showing a decline to -0.2%, against the projected 2.1%, weighing on the Euro and capping any further gains in the EUR/USD pair. From the US side, at 16:00 GMT, the NFIB Small Business Index for January was announced, indicating a decline to 95.0, against the expected 96.6, which put pressure on the US dollar, pushing the EUR/USD pair higher. At 20:00 GMT, the JOLTS Job Openings figures showed an increase to 6.65M, against the expectations of 6.42M, which supported the US dollar and capped any further gains in the EUR/USD pair.

Meanwhile, on the European front, the concerns over the Eurozone’s struggle to secure doses of coronavirus vaccines has left the Euro unattractive in recent weeks. However, this mood calmed down to some extent this week and made it easier for the Euro to improve against the weaker performance of its rival, the US dollar. Moreover, EUR/USD investors will await the release of inflation figures from Germany and the US for January. Eurozone inflation figures that are more robust than expected could counterbalance concerns about the European Central Bank’s potential monetary policy action.

However, if the President of the European Central Bank, Christine Lagarde, continues to express concerns over the strength of the Euro in Wednesday’s session, it will also have a negative impact on the Euro, that could drag the price of the EUR/USD pair down. The Wholesale Inventory data from the US might also impact the EUR/USD prices on Wednesday. However, the developments surrounding the coronavirus pandemic and the US fiscal stimulus will remain the biggest influencing factors for the EUR/USD pair.

Daily Technical Levels
Support Resistance
1.2023 1.2071
1.1997 1.2093
1.1975 1.2120
Pivot Point: 1.2045

Trading in the EUR/USD is sharply bullish at 1.2127, and it faces immediate resistance at 1.2133. Violation of this level could extend buying until the next target area at the 1.2158 mark. A further upward trend could lead the EUR/USD pair towards the next target levels of 1.2159 and 1.2176. On the lower side, the support remains at the 1.2093 level today. Good luck!

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.