GOLDWELL:Daily Market Recap - EURUSD Weekly Forecast

The Euro rose against the US Dollar on Friday after the release of the US labor data as the unemployment rate fell to 6.3% in January, prompting traders to abandon the greenback in favor of riskier assets. The EURUSD closed up 0.73 percent to 1.20490 on the final day of trading, recouping roughly half of its losses for the week.

The US Bureau of Labour Statistics reported on Friday the unemployment rate fell from 6.7% to 6.3% in January while modest job creation (+49,000) has returned. Although far from recovering the 227,000 jobs lost in the previous month, economic sentiment is tipping towards optimism. The American administration also showed Friday its determination to pass its massive stimulus plan of 1.9 billion dollars as President Joe Biden promised: “to act quickly”.

Meanwhile, the relative success of the American vaccination campaign, as compared to the European Union, can explain in part the weakness of the euro against the dollar last week. The slow rollout of vaccination in the EU has been encouraging shorts on the Euro and should continue to cap gains in the near term.

In terms of macroeconomic data, next week doesnt have major releases and the ones expected should have a relatively minor impact on the EURUSD. Wednesday would be the highlight of the week at this point as both Germany and the US will post January CPI updates.

From a technical perspective, since the validation of the break below the 20-day moving average in red on January 11th, the trend on the EURUSD has moved firmly in favor of the bears. After several unsuccessful tests to close back above, this trendline has established itself as a strong level of resistance in the near term.

(Chart Source: Tradingview 07.02.2021)

(Source: FXStreet 07.02.2021)

That said we see a lot of potential value around the 1.18522 level which can be seen as a future buying target. Traders may look into shorting the EURUSD in line with the current market trend up to the 1.19-1.18 channel before re-entering long positions to take advantage of the potentially oversold conditions ripe for a rebound towards the 1.20 handle.

Support & Resistance Levels:

R3 1.23275

R2 1.22226

R1 1.21000

S1 1.19601

S2 1.18522

S3 1.17554

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.