Daily Market Recap - EURUSD

The Euro is trading lower against the US Dollar at the start of the week on a backdrop of a deteriorating market risk sentiment and a resurgence in the greenback. The EURUSD is down 0.26 percent at the time of writing.

On the macro calendar, the main event for the common currency today was the release of the German IFO Business Climate Index for January which came in below expectations at 90.1. Complications related to the production and overall rollout for the covid-19 vaccine in Europe has led to a decrease in business sentiment across the continent, weighing on the Euro.

The increase in coronavirus contaminations and the extension of containment measures are raising concerns over the ongoing economic recovery process. A third containment is increasingly being discussed in France, the second-largest EU economy, hinting at another potentially disruptive month to come.

Meanwhile, the Fed will be hosting its two-day meeting tomorrow. Analysts will be looking for a comment on President Joe Bidens $1.9 trillion emergency program to support the economy. As it stands, not much is expected as for any immediate monetary policy action by the Fed, though the tone of the comments should provide some guidance on what to expect from the US Dollar in the near term.

From a technical perspective, the main trend on the EURUSD is down with the recent failure to move above the 20-day moving average concern for the bulls. The pair looks set to trade in a consolidation pattern between the 1.22 and 1.20 levels as little optimism can be felt in the air at the moment meaning a push above 1.22 will likely require a strong correction in the US Dollar side of the equation.

(Chart Source: Tradingview 25.01.2021)

The immediate downside support channel should be felt around the 1.21 mark and should act as the next pivot point for any consolidation move in the EURUSD. The upper trending parallel channel continues to hold for now and can be expected to frame the movements in the pair in the following sessions.

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.