EUR/USD Weekly Forecast (10th January 2022 – 14th January 2022)

Fundamental view:

The Euro lost traction against the greenback during the trading course of the week but erased some of it losses in the last day and ended with a slight bearish candle. The year 2022 started with a biggest shock from the Fed. Central bank had released the Minutes of its December meeting, that showed policymakers began discussing the reduction of their bonds holding in the upcoming months. And the Fed also judged that conditions for a rate hike could be met soon suppose if the recent pace of labor market improvements continued.

Talking about the virus woes, The dominant covid strain – Omicron spreads like wildfire, but the number of deaths and hospitalization remains low, it’s still putting pressure on the economy, due to a substantial disruption in services.

In this week, Eurozone Markit Manufacturing PMI on 3^rd January and ISM Manufacturing PMI on 4^th January favored bullish trend whereas Eurozone retail sales monthly report on 4^th January and FOMC minutes on 5^th January favored bearish trend for the pair.

The major economic events deciding the movement of the pair in the next week are Fed Chair Powell Testimony at Jan 11, Eurozone Industrial Production monthly report, EIA Crude Oil Stocks Change, US Federal Budget Balance at Jan 12, ECB Economic Bulletin, US Initial Jobless Claims at Jan 13, US Retail Sales monthly report and Fed Industrial Production yearly report at Jan 14.  

EUR/USD Weekly outlook:

Technical View:

Last week’s high was 0.07% lower than the previous week. Maintaining high at 1.1378 and low at 1.1272 showed a movement of 106 pips.

In the upcoming week we expect EUR/USD to show a bearish trend. The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the upside. Should 1.1295 proves to be unreliable support then the pair may fall further to 1.1231 and 1.1189 respectively whereas a solid breakout above 1.1401 will open a clear path upward to 1.1443 and then will further raise up to 1.1507. Chart formation of a Bearish butterfly pattern in H4 chart sets prospects for a bearish trend. Bearish engulfing formation in H4 chart escalates the expectation for a bearish trend.