EUR/USD Mid-Session Technical Analysis for February 8, 2021
The Euro is trading lower on Monday after an early session rally failed to attract enough buyers to extend the move. The single-currency opened on a firm note on follow-through buying following Friday’s closing price reversal bottom.
The catalyst behind that move was a disappointing U.S. jobs report, but today’s price action suggests traders are waiting for more data to confirm the U.S. economy will be weakening further.
At 12:23 GMT, the EUR/USD is trading 1.2026, down 0.0024 or -0.20%.
The Euro was underpinned early after data showed German industry avoided a contraction in December. Despite coronavirus lockdowns at home and abroad, demand from China helped export-oriented manufacturers in Europe’s largest economy weather the COVID-19 pandemic.
Helping to put a lid on prices is expectations of better U.S. economic data and continued progress in fighting the COVID-19 pandemic.
In a note to clients, J.P. Morgan strategists said they “have growing confidence of underperformance of EUR vs USD.”
“That warrants two changes to the portfolio: 1) rotating away from USD to fund trades primarily out of EUR, and 2) selling EUR/USD outright in spot.”
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart, however, momentum may be getting ready to shift to the upside with the formation of the potentially bullish closing price reversal bottom on Friday.
A trade through 1.1952 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will charge to up on a move through 1.2190.
The main range is 1.1800 to 1.2349. The EUR/USD is currently straddling its retracement zone at 1.2010 to 1.2074.
The short-term range is 1.2190 to 1.1952. Its retracement zone at 1.2071 to 1.2099 is the primary upside target.
The pair of 50% levels at 1.2071 to 1.2074 forms a potential resistance cluster.
Daily Swing Chart Technical Forecast
The early price action suggests the direction of the EUR/USD on Monday will be determined by trader reaction to 1.2010.
A sustained move over 1.2010 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to extend into the resistance cluster at 1.2071 to 1.2074, followed by 1.2099. Since the main trend is down, sellers are likely to come in on a test of this area.
A sustained move under 1.2010 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into 1.1952. Taking out this level could trigger an acceleration to the downside with the next major target coming in at 1.1800.