U.S. Dollar Tailwind Ahead Of Biden’s Inauguration
MaiMarFX | Jan 18, 2021 05:02AM ET
Last week ended with a lack of risk appetite in the market and the anti-risk US Dollar benefitted as a result, while short traders in the EUR/USD and GBP/USD were able to take a good profit.
Investors are awaiting the inauguration of Joe Biden, who ascends to the US presidency on Wednesday with a speech outlining his approach to the health and economic crisis. The current rebound in the dollar may persist going into the US Presidential inauguration but we will pay close attention to the technical picture in order to shape near-term expectations. Looking however ahead, the dollar remains vulnerable to further losses over the course of the year.h2 EUR/USD /h2
The euro gave up on its high price levels and the reason for the pullback was not only a stronger dollar, but also weaker GDP growth in Germany, another political crisis in Italy as well as a slow Covid-19 vaccine rollout in the EU.
Technically, the pair seems to be on its way towards a test of 1.20, or at least 1.2050 from where euro bulls could possibly try to lift the euro out of its current oversold territory. On the upside there is a lower resistance now at around 1.2160 that could limit near-term upward movements. A break above 1.2180, however, could reinvigorate bullish momentum towards 1.2270.
The cable gave up all of its recent gains after failing to overcome the 1.37-barrier. It will now be interesting whether the 1.3540-30 area serves as a support, providing some relief for sterling bulls. If the pound drops below 1.3530 we expect further losses towards 1.3450 and possibly even 1.34. For bullish momentum to accelerate we will need to see the pound breaking above 1.3660-70 but more importantly above 1.37.
DAX
The DAX edged lower after failing to stabilize above the 14000- threshold. We see a lower support at 13450 whereas on the upside, the 14300-level remains of interest.
Get The News You Want
It could be a quiet start to the new week with US markets being shut today for the Martin Luther King Jr. holiday.
Another key event this week will be the European Central Bank policy decision on Thursday but little is expected with all the ECB’s monetary settings likely to remain unchanged.
Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.