EUR/USD Forex Technical Analysis – Risk-Off Session Likely to Push Euro to Bearish Side of 1.2125 Pivot

The Euro is trading lower early Monday and in a tight range after the safe-haven U.S. Dollar found support at the start of a new week with traders continuing to eye the battle on Wall Street between hedge funds and retail investors.

Wrangling over the size of President Joe Biden’s fiscal stimulus package and delays to vaccine rollouts also weighed on investor sentiment, increasing the U.S. Dollar’s safe-haven appeal.

At 02:38 GMT, the EUR/USD is trading 1.2126, down 0.0010 or -0.08%.

Wall Street is bracing for more volatility after retail investor groups that organized via social media targeted hedge fund short positions, with some traders worried that the wild swings in GameStop and other stocks could foreshadow a market correction.

Meanwhile in Washington, a group of Republican senators are urging Biden, a Democrat, to significantly downsize his proposed $1.9 trillion pandemic relief package, and have floated a $600 billion alternative.

Daily Swing Chart Technical Analysis

The main trend is up, but momentum is trending lower with the formation of the secondary lower top on January 22. A trade through 1.2190 will signal a resumption of the uptrend. The main trend will change to down on a trade through 1.2054. The downtrend will be reaffirmed if 1.2025 fails as support. This is also a potential trigger point for an acceleration to the downside.

The main range is 1.1800 to 1.2349. Its retracement zone at 1.2074 to 1.2010 is support. This zone is also controlling the near-term direction of the EUR/USD. It stopped the selling in January at 1.2059 and 1.2054.

The minor range is 1.2190 to 1.2059. The EUR/USD has straddled its pivot at 1.2125 the last three sessions.

The short-term range is 1.2349 to 1.2054. Its retracement zone at 1.2202 to 1.2236 is potential resistance, and a potential trigger point for an acceleration to the upside.

Daily Swing Chart Technical Forecast

Based on the early trade, the direction of the EUR/USD on Monday will be determined by trader reaction to the pivot at 1.2125.

Bullish Scenario

A sustained move over 1.2125 will indicate the presence of buyers. If this move can create enough upside momentum then look for a near-term rally into 1.2190 to 1.2202.

Bearish Scenario

A sustained move under 1.2125 will signal the presence of sellers. This could trigger a break into 1.2074 to 1.2059.