News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
More View more
Real Time News
  • Dealing with the fear of missing out – or FOMO – is a highly valuable skill for traders. Not only can FOMO have a negative emotional impact, it can cloud judgment and overshadow logic. Learn how you can control FOMO in your trading here: https://t.co/lgDf5cVYOn https://t.co/kuqShllQFp
  • Although the longer-term technical outlook for AUD remains skewed to the topside, recent developments suggest the commodity-sensitive currency could lose ground against USD and JPY. Get your market update from @DanielGMoss here: https://t.co/Rl1h8WdXwp https://t.co/49RKx86FzG
  • ECB policymakers were out in force last week, saying they were watching Eurozone government bond yields, but yields rose anyway, and that’s positive for $EURUSD and the Euro crosses. Get your market update from @MartinSEssex here: https://t.co/nJdh9dA1HM https://t.co/peLh7zTTiz
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sIHrP https://t.co/vs7ypHHwya
  • The GBP rally vs USD came to an abrupt end and reversal; this sets cable up for more selling in the week ahead. Get your market update from @PaulRobinsonFX here: https://t.co/Ee9PSppnd2 https://t.co/uaiCiEHBMs
  • What are some trading takeaways from 2020, as we jump into the new year? Find out with your free guide here: https://t.co/e7udCTJlmf #DailyfxGuides https://t.co/OXUgYIl2ru
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here: https://t.co/8A1QhwMVKo https://t.co/xncree8XaW
  • Becoming a forex trader means living and breathing the excitement, risk and reward of trading in the biggest and most liquid market in the world. Do you have what it takes? Read here to discover the qualities and processes it takes to build consistency: https://t.co/EfWEACQ6Cz https://t.co/gGOU1RVQzq
  • Becoming a forex trader means living and breathing the excitement, risk and reward of trading in the biggest and most liquid market in the world. Do you have what it takes? Read here to discover the qualities and processes it takes to build consistency: https://t.co/EfWEACQ6Cz https://t.co/wrI29FTN41
  • Do you know how to properly Identify a double top formation? Double tops can enhance technical analysis when trading both forex or stocks, making the pattern highly versatile in nature. Learn more about the double top formation here: https://t.co/t9Flsqcxo9 https://t.co/UzzC1bGzRJ
Euro Forecast: Trading Through Political Headwinds - Setups in EUR/JPY, EUR/USD Rates

Euro Forecast: Trading Through Political Headwinds - Setups in EUR/JPY, EUR/USD Rates

Christopher Vecchio, CFA, Senior Strategist
Advertisement

Euro Forecast Overview:

  • The Euro is proving resilient despite a resurgent US Dollar, and it now may be finding the footing needed before attempting another turn higher.
  • Rising political risks in Italy and the Netherlands has been shrugged off by the Euro, as has some dovish jawboning by the European Central Bank.
  • Per the IG Client Sentiment Index, the Euro still has a bullish bias in the short-term.

Euro Dealing with Political Risks…?

The Euro has been plagued by poor vaccination rates, trailing both the post-Brexit UK and the post-Trump US, and now dual political crises in Italy and the Netherlands have emerged. And yet…the Euro does not seemed burdened. European bond yields are not shooting higher, perhaps because the European Central Bank has issued some dovish jawboning at its recent policy meeting. But even then, the dovish remarks about the Euro have gone unnoticed; the Euro is not trading lower.

EUR Forecast
EUR Forecast
Recommended by Christopher Vecchio, CFA
Get Your Free EUR Forecast
Get My Guide

EUR/USD RATE TECHNICAL ANALYSIS: DAILY CHART (January 2020 to January 2021) (CHART 1)

Euro Forecast: Trading Through Political Headwinds - Setups in EUR/JPY, EUR/USD Rates

In the prior update it was noted that “the rising trendline from the May and November 2020 lows comes into focus near 1.1950 through next week, in the midst of a confluence of significant technical levels: 23.6% Fibonacci retracement of the 2019 low/2020 high range at 1.1945; the August and September 2020 highs at 1.1967 and 1.2011, respectively; and the 23.6% Fibonacci retracement of the 2017 low/2018 high range at 1.2033. In aggregate, this major support zone is carved out between 1.1945 and 1.2033. Failure below here would be a significant bearish technical development.”

But the significant bearish technical development never transpired. Instead, bulls held support, and EUR/USD rates have turned higher through the intramonth downtrend. EUR/USD rates are now above their daily 5-, 8-, 13-, and 21-EMA envelope, which is almost in bullish sequential order. Daily MACD’s descent above its signal line continues to fade, while daily Slow Stochastics’ rise towards their median line has gathered pace.

The Euro is proving resilient despite a resurgent US Dollar, and EUR/USD rates now may be finding the footing needed before attempting another turn higher.

Building Confidence in Trading
Building Confidence in Trading
Recommended by Christopher Vecchio, CFA
Building Confidence in Trading
Get My Guide

IG Client Sentiment Index: EUR/USD Rate Forecast (January 26, 2021) (Chart 2)

Euro Forecast: Trading Through Political Headwinds - Setups in EUR/JPY, EUR/USD Rates

EUR/USD: Retail trader data shows 38.52% of traders are net-long with the ratio of traders short to long at 1.60 to 1. The number of traders net-long is 7.62% lower than yesterday and 12.80% lower from last week, while the number of traders net-short is 5.03% higher than yesterday and 6.43% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise.

Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/USD-bullish contrarian trading bias.

EUR/JPY RATE TECHNICAL ANALYSIS: DAILY CHART (January 2020 to January 2021) (CHART 3)

Euro Forecast: Trading Through Political Headwinds - Setups in EUR/JPY, EUR/USD Rates

EUR/JPY rates are back on the up-and-up, thanks in part to the rising tide of global equity markets (which EUR/JPY tends to track more closely than EUR/USD). EUR/JPY remains below the rising trendline from the October and November 2020 swing lows at the end of the week, but has rebounded ahead of the rising trendline from the May and November 2020 lows, as well as the 38.2% Fibonacci retracement of the 2014 high/2016 low range at 124.71.

Momentum is turning bullish for EUR/JPY rates, slowly but surely. Daily Slow Stochastics are trending higher through their median line, while daily MACD’s descent above its signal line has faded (just like EUR/USD). EUR/JPY rates are above their daily 5-, 8-, 13-, and 21-EMA envelope, which is aligning in bullish sequential order. A return to the rising trendline from the October and November 2020 lows calls for a move towards 127.00 over the coming sessions (before running into the September 2020 high near 127.08)

Forex for Beginners
Forex for Beginners
Recommended by Christopher Vecchio, CFA
Forex for Beginners
Get My Guide

IG Client Sentiment Index: EUR/JPY Rate Forecast (January 26, 2021) (Chart 4)

Euro Forecast: Trading Through Political Headwinds - Setups in EUR/JPY, EUR/USD Rates

EUR/JPY: Retail trader data shows 40.35% of traders are net-long with the ratio of traders short to long at 1.48 to 1. The number of traders net-long is 15.12% higher than yesterday and 15.12% higher from last week, while the number of traders net-short is 17.48% lower than yesterday and 5.79% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/JPY prices may continue to rise.

Yet traders are less net-short than yesterday and compared with last week. The combination of current sentiment and recent changes gives us a further mixed EUR/JPY trading bias.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES