EUS/USD Price Forecast – Euro Testing Familiar Resistance Again

The Euro has rallied towards the 1.23 level on Monday to kick off the new trading year, as we continue to chip away at the massive resistance area just above. It extends all the way to the 1.25 handle, so it is likely that we are going to see a lot of noise in this general vicinity, but clearly the overall attitude of this pair is to go higher.

EUR/USD Video 05.01.2021

This is probably driven more by monetary policy in the United States than anything else, as the Federal Reserve is going to continue to keep conditions very loose for at least a couple of years. Furthermore, economists are anticipating that the European Union will outperform the United States in 2021, so the idea is that more money is flowing into the continent to take advantage of strengthening economies. That being said, it should be noted that we have a lot of work to do before we clear that area, so at this point in time it is very likely that traders will continue to jump in and buy the dips as they occur. I have no interest in shorting this market, even though I can make an argument for a pullback all the way down to the 1.20 level underneath.

Near the 1.20 level, there is the 50 day EMA, and of course a zone of support that extends down to the 1.19 level based upon market memory. That seems to be very difficult to imagine at this point though, so I think what we are more than likely going to see most of the early part of this year is a simple “buy the dips” type of market that is more of a grinder, and less of a runner.

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