The Euro has initially tried to rally during the trading session on Friday but gave back the gains rather quickly. By doing so, it looks as if we are threatening not only the 1.21 handle, but also the 50 day EMA underneath. This is a general vicinity where we had seen a push higher as of late, and I think somewhere between there and the 1.20 level we will probably see people looking to buy they Euro “on the cheap” in that area as well, as stimulus in the United States is without a doubt the big driver of what we are seen with the greenback at the moment.
There are some questions as to whether or not Joe Biden can get a $1.9 trillion stimulus package through Congress, but one would think that the package will be large no matter what it ends up being.
EUR/USD Video 18.01.21
As we head into the weekend, it could be a little bit of profit-taking from the overall trend, or you could just look at it as a market that faces a significant amount of resistance near the 1.23 handle, and therefore needed to pull back in order to build up a little bit of momentum to make a serious charge at it. There is resistance between the 1.23 level and the 1.25 handle, and I think of it as a massive “zone of resistance” for the trend in general. I have no interest in shorting this pair, at least not until we break down below the 1.19 handle, which would probably open up the possibility of a move down towards the 200 day EMA.
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