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EUR/USD Forecast 4 Feb 21

In my last update, I spoke about the EUR/USD’s push for 1.2. It happened.

EURUSD Daily Chart

Technical Analysis

In this EUR/USD daily chart, we see the currency pair pushing below 1.2 and the lower bollinger band. It is evident that the bearish momentum is strong for the week. Now that the currency pair is beyond the lower bollinger band, we can expect some bullish pressure as the bands fight to normalize.

The immediate support is now 1.19, followed by the strong technical and sentiment region of 1.18.

Sentiment Analysis

SP500

The S&P 500 edged higher yesterday, and the Cboe Volatility Index has fallen. This suggests that volatility is receding.

The ADP Non-Farm Employment Change turned out to be much better than expected. It reported 174k instead of the expected 48k. Positive sentiment towards the US dollar has increased.

ADP’s statistics are based on the payroll data of approximately 400,000 U.S. business clients. Therefore, it is viewed by many as a possible early indication of the US Non-Farm Payroll result. This positive result will set a high expectation for the US Non-Farm Payroll on Friday. Any deviation, especially if it is towards the downside, will probably trigger increased volatility.

The US Brent Oil is bullish and is now at $58.80. Despite the strengthening of the US dollar, the price has risen. This indicates significant bullish pressure and demand. If this trend continues, it can be a sign that the global economy is recovering.

I am undecided at the moment if the market is bullish. Factors contributing to risk aversion remain. The soon to be released USA Unemployment Claims may bring some clarity.

The Week Ahead

There are important economic events this week. I highly encourage you to read through and learn about these events. This helps improve your understanding of the market sentiment.

USA Average Hourly Earnings
Consumer earnings is important due to it’s upstream impact. With more earnings comes possible increased consumer spending. This translates to revenues, leading to employment and business expansion.

USA Non-Farm Employment Change
USA Unemployment Rate
Employment is a fundamental component of the economy as it leads to consumer spending and hence retail sales. A low unemployment rate is an indicator of a healthy functioning economy.

The US Non-Farm Payroll is basically data released by the U.S. Bureau of Labor Statistics on a monthly basis that represents the total number of employed US workers, excluding the following employees:

– general government employees
– private household employees
– employees of nonprofit organizations which provide assistance to individuals
– farm employees

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