The US Dollar is down again after testing a resistance at 90.950, although it is above an important support level of 90.420. The tension rises as Joe Biden’s elected Treasury Secretary and former FED Chair – Janet Yellen is expected to announce before the Senate that the $1.9 trillion stimulus package proposed by Biden’s administration should be approved. Joe Biden also stated that he is planning to extend the travel restrictions from those who travel from Europe and Brazil soon after Donald Trump signed an order to lift those restrictions starting from January 26.
The volatility of EUR/USD will be high and will last until the end of Thursday ahead of the ECB Interest Rate decision.
From the technical point of view, EUR/USD remains bullish following a breakout from the dynamic resistance of the descending channel, however, there are resistances that might halt the further uptrend.
Admitting that Euro retraced from an important support of $1.20540 and the impulse was strong enough to break the dynamic resistance, some indicators and levels show that a correction to the uptrend should be expected. By the time of writing this article, EUR/USD quote on Overbit is $1.21287 which is above the Fibo 0.236 level and below the $1.21350 support and resistance zone. While MACD still signals the bullish continuation, RSI indicator is already in the overbought zone.
Closing above the $1.21350 will lead to a jump towards $1.21670 resistance and Fibo 0.382 level and towards Fibo 0.5 at $1.22020 above that. If Euro fails to overtake the resistance mentioned, one should not consider the downtrend continuation of the pair, as it might be a retest of the dynamic resistance as shown on the chart below.
Important Economic data to watch this week for EUR/USD are:
January 20, Eurozone – CPI (YoY) and (MoM), Core CPI (YoY)
January 21, Eurozone – ECB Rate Decision
January 21, US – Initial Jobless claims (Dec), Building permits (Dec) and Philly Fed Manufacturing Index (Dec)
January 22, US – Existing Home sales (Dec)
January 22, Eurozone – Manufacturing PMI (Jan), German Manufacturing PMI (Jan)