The US Dollar index is gaining the second week in a row. The surge of the DXY is sponsored by the decreasing of the new Covid-19 cases in the US and stimulus hopes.
The US vaccination plan and restrictions implemented resulted in a decrease of the new active cases.
Source: Worldometers
More and more trials and tests are ongoing in different pharmaceutical companies, and yet another giant – Johnson and Johnson reported that their vaccine is 72% effective against moderate and severe disease in the US, and 57% in South Africa. In South Africa, 95% of cases in the trial were due to a variant known as B.1.351, which is known to be more contagious and carries mutations. These mutations are most likely to be less responsive to antibodies. The spread of this variance is already confirmed in the UK and caused anxiety. Another best part of this vaccine is that it’s single-dose and affordable.
President Biden’s administration already signed a policy to lift the rate of vaccination among the US delivering more than 33 million shots. The European Union on the other hand is demonstrating a rather weaker approach to beating the Covid-19 spread, with Spain hitting new records of Covid-19 cases.
US GDP as per the final quarter of the last year, released on January 28, demonstrated a 4% growth, while the data from the EU, released yesterday, were rather unsettling. Europe’s GDP (QoQ) is down 0.7% and (YoY) is down 5.1%. Despite the released positive PMI data and a rather positive Core CPI (YoY) s per January, Euro still looks weaker against the US Dollar.
As seen on the chart above the pair is following it’s downtrend path within a descending channel. By the time of writing this article the pair is testing the $1.20120 support and lacks momentum to retrace from this level. Hence, EUR/USD will most likely break the aforesaid support level and drop to test the lower edge of the channel and find support at $1.19650-$1.19600. After the test of $1.20120 support, the pair retraced and tested the previous strong support at $1.12500 as resistance, hence this adds bearish sentiment to the pair.
The path of the downtrend on a 15M chart also demonstrates the same levels and a rather bearish sentiment of EUR/USD.
The Non-farm Employment change which is going to be released today and tomorrow’s Initial Jobless Claims will be significant for the USD, as the employment growth is the FED’s key metrics for the economic recovery.
Technical analyst, crypto-enthusiast, ex-VP at TradingView, medium and long-term trader, trades and analyses FX, Crypto and Commodities markets.