The EURUSD has been trading within a yearly range between 1.0340 and 1.25550 which was formed in a very bullish 365 days between January 2017 and January 2018.
This year 2020, we have tested deep into the support zones between 1.0800 and 1.0400 which has been previous major support through the Brexit referendum and the lead up to that decision.
We’re currently now trading within the Weekly and Monthly zones where Supply exceeded demand and have found a ceiling of resistance @ 1.2272 as the US dollar inversely has run into a very supportive zone on the US dollar index.
The run up for the EURUSD from the start of November 2020 has been within a tight rising channel and the there is a high probability that this channel breaks to the downside. If it were to break lower, the first line of support would be the Swing High formed on the 1st of September 2020 at the major round psych level of 1.2000
However, the US dollar is in a major downtrend, so there could be some more bullishness to come for the euro and should the EURUSD be able to nudge higher against the US dollar it would run into the previous monthly / weekly supply. Also, the 1.2341 level is an equal extension higher of the trading range formed during the peak of COVID-19 pandemic hysteria. The 1.2341 to 1.2400 zone is a great target for any euro bull if they are to find any help in taking the 2018 high and 1.2560.
If we assume that the US dollar is to have some bear market rally, the traders looking to short the EURUSD would have an eye on the double bottom chart pattern swing lows from September & November 2020 and the 1.1500 big figure which coincides with the daily 200 Simple Moving Average (SMA).
Today we have the Eurozone Consumer Confidence (Flash) data, which last month reached a 6-month low. Today’s Expectations are for further downside to continue as the COVID-19 situation has not got any better of late. This data is high impact, and any weakness would translate to a lower euro.
Brexit talks are still ongoing with the UK PM Johnson and European Commission President von der Leyen likely to call each other to try and break the deadlock, though any decisions are unlikely to materialise today. This will put pressure on the euro and Sterling but as the UK announced tighter restrictions due to the COVID-19 situation worsening in the South East of England including London, the EURGBP could help prop the euro currency a little.
This week is a shortened week due to the holidays and the markets will be thin on volume. Any news announcements could have a short but sharp movement hence why trading on the higher time frames is recommended and using long established zones of support and resistance is necessary.