EUR/USD Mid-Session Technical Analysis for January 2021

The Euro is trading nearly flat late in the session on Thursday after clawing back earlier losses as traders await Biden’s stimulus plan. Expectations for President-elect Joe Biden’s fiscal stimulus pushed yields of U.S. government bonds higher, helping to underpin the U.S. Dollar.

The 10-year Treasury yield rose after CNN reported the stimulus will be around $2 trillion, adding support for the dollar and weakening the Euro and commodity-linked currencies.

At 19:45 GMT, the EUR/USD is trading 1.2154, down 0.0002 or -0.02%.

The Euro retreated early in the session despite positive news from the Euro Zone’s economic powerhouse.

Germany’s economy shrank by 5% in 2020, less than expected and a smaller contraction than during the global financial crisis, as unprecedented rescue and stimulus measures lessened the shock of the COVID-19 pandemic.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.2025 will change the main trend to down. A move through 1.2349 will signal a resumption of the uptrend.

The short-term range is 1.1800 to 1.2349. Its 50% level at 1.2074 is potential support. This level is controlling the near-term direction of the EUR/USD. A failure to hold could trigger an acceleration to the downside.

On the upside, a pair of 50% levels at 1.2187 and 1.2230 is potential resistance.

Short-Term Outlook

The price action suggests that the major players are likely on the sidelines until they hear what Biden has to say. If he promises too much stimulus then the EUR/USD could fall since this could speed up the economic recovery and encourage the Fed to end their bond purchase stimulus more quickly.

On the daily chart, 1.2230 is a potential trigger point for an acceleration to the upside and 1.2074 is a potential trigger point for an acceleration to the downside.

For a look at all of today’s economic events, check out our economic calendar.