EUR/USD: bearish forecasts
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What happened?
EUR/USD has started the week on the negative footing as
- the market sentiment turned to risk-off amid vaccine delays and rising cases in Eurozone,
- markets await the ECB meeting on Thursday, which is unsatisfied with too high EUR,
- the EUR has a historical tendency to drop after US inaugurations,
- and bearish technical signals.
Forecasts
Most analysts foresee that EUR/USD will inevitably dip to 1.2000 over the coming days. However, it should be just a short corrective pullback ahead the pair continues further rallying upwards.
ING: “Wrapping up, ongoing Italian political uncertainty and a steadier dollar could briefly see EUR/$ trade 1.1980”.
Nordea Markets: “More often than not (9 out of 12 times), EUR/USD drops in the aftermath of a presidential inauguration. We are less gullible buyers of risk for now, but would consider using levels around 1.1950 in EUR/USD to go long again”.
Technical outlook
- The divergence between RSI and price may warn of the market reversal. When the new high of the price is not confirmed by the new high in the RSI, it’s a bearish divergence, which is a negative signal.
- The bearish divergence will be also confirmed if we look at the MACD indicator. Elsewhere, MACD has approached the zero line. Once it crosses it, it will be e bearish signal as well.
- The key support area is 1.1950-1.2000. If the pair drops to this level, it shouldn’t fall further. The reverse to the upside will be expected.
