EUR/USD Mid-Session Technical Analysis for December 31, 2020

The Euro is trading lower against the U.S. Dollar on Thursday as traders wrap up the year with a little profit-taking and position-squaring. Fundamentally, lockdowns and rising COVID-19 cases are overshadowing the optimism around the rollout of vaccines in the New Year.

Trading volume is thin, with many traders away on New Year’s Eve and major European markets closed. Where markets were opened, they failed to follow their Asian peers higher.

At 14:00 GMT, the EUR/USD is trading 1.2284, down 0.0016 or -0.13%.

Heading into the new year, while the United States is facing huge deficits, which should continue to weigh on the dollar, the European Union runs a huge current account surplus, largely thanks to Germany, so there is a natural inflow to Euros through trade.

The Euro will come into 2021 with a bullish head of steam, but its gains could be limited if European Central Bank officials begin to express concerns over its high value and possible negative effect on Euro Zone exports.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.2310 will signal a resumption of the uptrend. The main trend will change to down on a move through 1.2059.

The minor trend is also up. A trade through 1.2130 will change the minor trend to down. This will shift momentum to the downside.

The nearest support levels are a pair of 50% points at 1.2220 and 1.2185.

Daily Swing Chart Technical Forecast

We’re not looking for much movement on Thursday. Taking out 1.2310 will give the EUR/USD an upside bias for the day, but the low volume could limit gains. Meanwhile, a move through 1.2248 will signal the presence of sellers with 1.2220 a possible downside target.