Daily Market Recap - EURUSD

The Euro is trading higher against the US Dollar on Tuesday after putting in a minor reversal above yesterdays close of 1.20746. The strength behind the move in the EURUSD today can be linked to an overall pick up in demand for riskier assets and a drop in the US Dollar triggered by comments from incoming Treasury Secretary Janet Yellen in favor of big stimulus.

US President-Elect Joe Biden will be sworn into office on Wednesday and is expected to deliver a new stimulus plan in the coming days to alleviate pressure on the economic recovery efforts in the US. Biden is also expected to increase efforts in the distribution of the covid-19 vaccines in order to bring the virus under control.

In Euro news, Moderate Armin Laschet was elected to head the CDU, the party of Ms. Merkel, who is completing her fourth term as Chancellor in the spring. “This is clearly the continuity candidate in line with Angela Merkel, which reduces fears of having a conservative candidate quick to question budgetary support or European solidarity after the October legislative elections (an element in favor of the single currency)” according to CIC Market Solutions.

From a technical perspective, momentum in the EURUSD remains tilted to the downside despite a recent pickup in bullish demand. Buyers will be looking to cross above the 1.21520 level though will likely face strong resistance in their attempt. A break above the 1.21250 will resume the uptrend in the pair.

(Chart Source: Tradingview 19.01.2021)

On the flip side, the immediate support level should be found around the psychologically significant 1.20 mark. Value pickers will likely come back in at that point to prop up the EURUSD. Should they fail to hold, an acceleration to the downside is likely with the following level of attention for sellers being the 1.19612 pivotal points from November lows.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.