The EUR/USD pair remains in a bearish trend as it started the year on a soft note. Despite last Friday’s weak NFP report, the bounce did not break above the upper edge of a falling channel. As such, the chances are that the pair will resume the downtrend once the market participants start digesting the details of the last week’s job report.
With no important economic release ahead, the focus today is, once again, on the stock market. The Dow in the United States close last Friday at the highs, and that put bearish pressure on the dollar. We may see something similar today, but let’s not forget that overall, the EUR/USD and the stock market did diverge in 2021. While many traders associate higher stocks with a lower dollar, the dollar did not fall by as much as expected. In fact, it gained ground, especially against the Euro.
EURUSD Technical Analysis
The falling channel on the chart below shows clearly how the EUR/USD pair forms a series of lower lows and lower highs. As long as the series remains in place, the pair remains bearish. Bears may want to sell closer to the upper trendline for a move to new lows and towards the lower edge of the channel. 1.20 looms large and acts as a pivotal level, but once cleared, more downside should come.
EUR/USD Price Forecast