U.S. Dollar With a Tailwind Ahead of Biden’s Inauguration

Last week ended with a lack of risk appetite in the market and the anti-risk U.S. dollar benefited 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 U.S. 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 U.S. 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.


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.


The index 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.

This could be a quiet start to the new week with U.S. 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.

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Euro Trends Downwards While Pound Remains Stable

Dear Traders,

The euro depreciated against the U.S. dollar and fell below 1.07 while the British pound has shrugged off the U.K.’s process of leaving the European Union. One reason for the pound’s resilience is the fact that an expected slowdown of the U.K. economy has not yet materialized. Inflation seems to be accelerating, paving the way for higher interest rates while investors expect the U.K.’s negotiation talks with the EU to be constructive.

The pound tested the 1.25-level but for the time being, it was unable to hold above that level. A break above 1.2530 could encourage sterling bulls to push the pound for a test of 1.2560. Above 1.26 however, we expect sterling to head for a test of 1.27. A current support is seen at 1.2425. Sterling traders will watch the U.K. GDP report scheduled for release at 8:30 UTC.

The euro knew only one direction on Thursday: downwards. The single currency came under pressure following a report that European Central Bank officials said they are cautious about changing their monetary policy any time soon. Given that dovish message and the slowdown in German consumer prices, there was no reason for euro bulls to justify higher price levels. The EUR/USD could even extend its losses provided that Eurozone CPI data, due for release at 9:00 UTC, comes in weaker-than-expected. Euro traders should also keep an eye on the German Employment report scheduled for release at 7:55 UTC. In short-term time frames we expected the currency pair to trade between 1.06 and 1.0715.

We wish you a wonderful weekend.

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Copyright © All Rights Reserved 2017 Maimar-FX.