EUR/USD Weekly Price Forecast – Euro Gives Up Early Gains for the Week

The Euro has initially rally during the course of the week, only to give up gains near the top of the consolidation range. Now that we have continued to show the 1.1375 level as a significant barrier, it looks to me like we are going to spend the next couple of weeks bouncing around in this general consolidation. That makes a lot of sense considering that we are at the end of the year, and liquidity will become a major issue starting next week. With that in mind, if you are a range bound trader you might be able to make a little bit of money here and there, but I would not expect big moves.

EUR/USD Video 20.12.21

That being said, sometimes with liquidity is an issue, bigger moves happen by accident. Perhaps a company comes in and buys up too much of a particular currency, and you get a significant spike. If we do see that, the best defense of course is keeping your position size reasonable, something that unfortunately a lot of retail traders will choose not to do in this environment. Yes, you can make a lot of money going back and forth with huge positions, but it only takes one bad spike in the market to wipe out your account in that scenario.

To the downside, I see the 1.12 level offering significant support, so if we were to break down below there, we could open up the move down to the 1.10 level, even though the European Central Bank has suddenly noticed inflation. They have not actually done anything about inflation, but they have paid a little bit of lip service to it.

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