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EUR / USD may decline to 1.21

In Asia, the EUR / USD pair was trading mostly in the red. The US dollar maintained its dominant position in the market thanks to the growth in the yield of US Treasuries.

 

At the beginning of the European session, the market situation changed. The yield on 10-year securities fell from a new local maximum at 1.158 to 1.148. The dollar gradually began to weaken against the G7 currencies. So far, only the Swiss franc is trading down 0.07% against the US dollar.

 

The market is still experiencing a shortage of important economic news. The main focus of investors' attention is directed to the dynamics of the Treasury yield movement and policy news.

 

In the United States, Democrats continue to increase pressure on the White House with the aim of the early resignation of Donald Trump from the presidency of the United States. Trump has been accused of inciting the storming of the Capitol last week. House Majority Leader Steny Hoyer said lawmakers would consider impeachment on Wednesday unless Trump voluntarily resigns before then. On Monday, a GOP official said Trump had partially admitted some responsibility for the attack on the Capitol.

 

In Europe, the main political battles are now taking place in Italy. Prime Minister Giuseppe Conte faced opposition from his coalition partner and former Prime Minister Matteo Renzi. Renzi does not support the government's plan to distribute money from the EU's economic recovery fund. Political confrontation in Italy may end with a reshuffle in the government or the announcement of early elections.

 

On Tuesday 12.01, there is no important news in the US and EU economic calendar.

The currency pair remains under pressure. Yesterday bears managed to push through local support at 1.2160. This is a signal indicating the continuation of the downward movement towards 1.2100. Today we are watching the level 1.2170. While the price remains below this mark, the bearish scenario remains the priority.

 

  • Resistance levels: 1.2170, 1.2240, 1.2275.

 

  • Support levels: 1.2140, 1.2100, 1.2050.

 

The main scenario is a correction to 1.2170 and a downward reversal.

 

An alternative scenario is a breakdown of intraday resistance at 1.2170 and an increase to 1.2240.

 

The current fundamental outlook is neutral. We consider shorts from the levels of 1.2170 and 1.2240.

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