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EUR/USD Update 14 Jan 21

It is time for a EUR/USD update as we head into the end of the week.

The possible breakout that I mentioned in the last update materialized. The EUR/USD is now back at the previous range.

EURUSD hourly chart

Technical Analysis

Looking at the EUR/USD hourly chart above, we note that the currency pair is consolidating again within the bollinger bands after a brief breakout. If you read my previous update, you would be prepared for it. I hope you managed to be on the right side of the fence!

The EUR/USD is now facing support at the middle bollinger band as it seeks to descend. If the support fails, the lower bollinger band will likely be the next support. A return of bullish pressure will probably see resistance at the upper bollinger band, followed by the extended bullish target at 1.22.

Sentiment Analysis

Equities rose slightly over the days. The market continues to function with minimal impact from the US impeachment proceedings.

S&P 500 daily

Looking at the S&P 500 chart above, we observe a peak followed by a drift downwards. It is now slightly red for the week. We observe a similar peak in the EUR/USD and while the timing may not be exactly the same, this correlation continues to stress the importance of evaluating the market holistically. Risk appetite has recovered compared to the previous update as seen in the equities market.

A look across the various financial news media now suggests a better sentiment for Thursday’s US trading. If this happens, we may see some weakening of the US dollar as investors seek risker assets.

The Week Ahead

Today is light on the economic news front but there are important events on Friday. I highly encourage you to read through and learn about these events. This helps improve your understanding of the market sentiment.

US Fed Chair Powell Speech
Speeches may reveal new insights into economic policies or contain a question and answer segment that at times go into unscripted topics resulting in unexpected developments and volatility.

US Core Retail Sales
US Retail Sales
Retail sales is a fundamental component of the economy. As consumers spend, it translates to revenue and flows upstream as salaries, wholesales purchase, production orders, and so on.

Do be mindful that these are not the only events and they are not in chronological order. You should be following an economic calendar so that you will not be caught unaware. Premium members can log in to view the economic calendar.

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