GOLDWELL：Daily Market Recap - EURUSD Weekly Forecast

The Euro ended the week lower against the US Dollar after breaking down below the 1.21 mark. The EURUSD is under pressure from an overall decrease in market risk sentiment as a flight to safety is helping to prop up the greenback. The pair finished down 0.63 percent on Friday, bringing to weekly tally to -1.18 percent.

On a backdrop of increasing covid-19 cases in Europe, France and Germany have begun taking extra measures to combat the rise in infections. France has notably brought forward its curfew by two hours as the French government continues to assess the effectiveness of its restrictions while maintaining that it will have no qualms over re-instating a third national lockdown. Euro bulls have their backs up against the wall at the moment with little optimism to hang onto.

Meanwhile, US President-Elect Joe Biden has announced that he will detail his recovery plan this coming Thursday. The plan is expected to be between 2 to 3 trillion dollars, roughly 10-15 % of American GDP. So far, the news has failed to stimulate stock markets as the major's Wall Street indices have closed lower for the week. Instead, traders have been hoarding up US Dollars as risk aversion takes hold.

From a technical perspective, the EURUSD has broken through an important support level at the 1.21 handle and looks set to move even lower towards the next significant level of 1.20. The round figure will serve as an indicator as to whether sellers have sufficient momentum to firmly take control. The next test for bears will be to retrace back to the 0.5 Fibonacci retracement level around 1.19626.

Traders may look to take advantage of some follow-through selling at the start of the session and enter conservative shorts in the EURUSD to ride the wave down to the test of the 1.20 level with stops set at 1.215. Should the pair pullback above this point, we may see a reversal take form with an upside target of 1.22 along with the 20-day moving average.

(Chart Source: Tradingview 17.01.2021)

Looking ahead, until Joe Biden's recovery plan is presented, the EUR/USD will likely continue to be mainly influenced by the evolution of the pandemic and health restrictions. Traders will also be watching key economic reports this week such as EU Industrial Production, the Fed's Beige Book, and the ECB's Monetary Policy Report.

Support & Resistance Levels:

R3 1.23256

R2 1.22226

R1 1.21543

S1 1.20483

S2 1.19626

S3 1.18770

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.