EUR / USD Price Outlook:
- EUR / USD took advantage of a break above the 1.2153 mark which opened the door for further gains
- The Federal Reserve being committed to its program of buying bonds and low rates, USD weakness seems likely to persist
- Further still, IG customer sentiment reveals that retail traders are extremely short EUR/ USD, a hint that the pair may continue to rally
US Dollar Price Outlook: EUR / USD Rises, Will The Rally Continue?
the US dollar has weakened since March and the recent Federal Free Market Committee This meeting may have paved the way for a continued decline in the US Dollar Basket (DXY), despite the global economic recovery. Presented by Fed Chairman Jerome Powell himself, Fed officials found little reason to cut bond purchases or raise rates before 2023, which means the bears in the USD could stay under control. While global central banks are in a race to the bottom in many ways, the Fed’s bond purchases put it one leg above the rest and this accommodating advantage is visible on EUR / USD rates.
Recently, hitting its highest level since April 2018, EUR / USD added another victim to its growing list of technical levels that have been broken in recent months. He has made considerable progress in halting the multi-year decline he found himself in as a result. European Central Bank officials have already taken note of this but, judging by their comments, have little interest in reducing the continued strength of the euro in the near future. Still, this could become a concern in the future.
EUR / USD price chart: Daily period (January 2018 – December 2020)
In the meantime, the stable underlying landscape and the recent technical breakout suggest that EUR / USD may continue to rise. Since the pair is trading at levels not seen in more than two years, the immediate technical hurdles are rather sparse. Still, earlier highs in early 2018 – the closest of which only comes in at 1.2405 – may have some influence if the EUR / USD pushes higher.
EUR / USD price table: 4 hour period (August 2020 – December 2020)
Despite the recent upside breakout, short-term withdrawals are not out of the question and could serve as a healthy consolidation. In the event of a reversal, anticipated support may reside around the 1.2174, 1.2150 and 1.2100 levels. A potential ‘line in the sand’ that, if broken, could signal further losses hinges on the December low of 1.2059.
of customers are net long.
of customers are net short.
As it stands, EUR / USD appears to be leaning upward. IG customer sentiment data reveals that retail traders remain net-short suggesting that EUR / USD may continue to rise as we generally take a contrite view of crowd sentiment. To follow @PeterHanksFX on Twitter for updates on this pair.
– Written by Peter Hanks, Strategist for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX