The EURUSD has had its worst weekly performance since March as the most popular currency pair fell by 0.34 per cent at the close on Friday. The Euro recently climbed as high as 1.20114 against the buck back in August but has since tanked heavily and is now trading just above the 1.16 mark.

The Euro is under significant pressure as a reversal in risk sentiment is favouring heavily the greenback versus its major rivals. The surge in covid-19 cases in Europe is weighing heavily on the pair as EU countries are mulling over measures to curb infection rates with parts of Spain, France, and the UK already under new restrictions.

In the US last week, announcements made by the US Federal Reserve Chairman Jerome Powell and other Fed policymakers reiterated that further monetary stimulus at this point would be less effective than fiscal measures, effectively passing the buck to the US Congress to agree over a new package.

From a technical perspective, the main trend in the EURUSD is down on the daily chart. The pair will likely stabilise somewhere between the 1.155 and 1.1650 levels in the near term. An upward correction can be expected after such a strong selloff, though the upside target wouldn’t be higher than 1.16866 for now. The ultimate target for bulls would be to cross back above the support turned resistance level around 1.17500 in order for the uptrend to be preserved.

The trading range next week for the EURUSD should fall between a resistance of 1.17560 and support of 1.50. Value hunters will likely pick up buying demand below 1.150 in an effort to ride the bounce back towards the mean. Traders may look to enter conservative shorts at the current rate for a test of the 1.15982 mark before longing the pair back towards 1.16866.

For now, the EURUSD seems set to start the week under pressure as there hasn’t been any redeeming news so far which would provide some respite to Euro bulls. Although EURUSD bears should remain cautious as the Fed does not want the greenback to rise too rapidly which may come into play in medium term.

Looking ahead, Traders will have a chance to react to the European CPI figures on Wednesday as well as the US non-farm payrolls on Friday.

Support & Resistance Levels:

R3       1.18000
R2       1.17560
R1       1.16866
S1        1.15982
S2        1.15000
S3        1.14500

Analysed by: Mr. Thibault Moirez, Independent Analyst