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At just the beginning of the week, the EUR / USD pair is already under considerable stress. This week may be quite difficult for the classic tandem, as the week is replete with many events that will increase its volatility. A number of analysts expect a noticeable rise in the EUR / USD pair.
The EUR / USD pair reached 1.1100, and finished at 1.1090 at the end of last week. According to experts' calculations, there is a strong support area near this value. They explained significant price fluctuations using active profit-taking from market participants who conducted these operations on the eve of the weekend. Recall that today, in the United States, exchanges are working in a reduced mode, and banks are closed due to the celebration of the Martin Luther King Day.
The end of last week was marked by a steady downward spiral of the EUR / USD pair. The tandem collapsed to 1.1120, but did not reach the bottom.
According to experts, 1.1145 will become the ceiling for the EUR / USD pair in the near future. On Monday morning, January 20, the pair started quite cheerfully, rising to 1,101.
Later though, the volatility made itself felt, and the EUR / USD pair began to storm. At first, the tandem dropped slightly to 1.1097–1.1098. It did not dare to slide further.
Later on, concerns disappeared, as the EUR / USD pair resumed its downward movement towards the bottom and returned to the 1.1090 mark. It then reluctantly rose to 1.1094–1.1095. Experts believe that this trend will be repeated.
The main events that will shape the dynamics of the EUR / USD pair will come from the Eurozone. Further direction will be set by the macroeconomic data, as well as the upcoming ECB meeting scheduled for Thursday, January 23, which will be the first meeting in the coming year. Earlier, the regulator confirmed its wait-and-see position regarding further reduction of the key rate. Experts do not exclude the continuation of this strategy, as it will provide significant support to the European currency.
As for the US currency, which has been actively strengthening over the past week, it will have to give up its positions a little. The dynamics of the dollar will be determined by current statistical data, and experts believe that it will not cause drastic changes in the EUR / USD pair. On Wednesday, the minor macroeconomic data from the United States concerning the real estate market is expected to be published. These include the housing price index and the level of sales in the secondary market. According to preliminary estimates, both indicators will be on top, but they will not have a noticeable impact on the EUR / USD pair and on the dynamics of dollar.
The catalyst for the further movement of the EUR / USD pair will be events such as the world economic forum, which will start on Tuesday, January 21, and will run until Friday, as well as the publication of the ZEW index of business sentiment in the Eurozone. Tomorrow, all traders' attention will be focused on these indexes. Experts expect positive dynamics in the European space. The reason for optimism is the strong data for the past month, recorded in Germany and in the European economy. In Germany, the business sentiment index left the negative zone for the first time since May 2019, reaching 10.7 points. According to experts' forecasts, the indicator will soar to 15 points in January. As for the business sentiment index for the entire Eurozone which rose to 11 points in December, according to preliminary calculations, it will grow up to 16.3 points this month. If this scenario is implemented, the European currency will be in the kings, making a worthy competition to the dollar.
The favorable ground for the growth of the euro, as well as the economy of the Eurozone countries, is a significant drop in tension in the trade war between Washington and Beijing. Experts believe that if the truce continues, euro's medium-and long-term prospects will be positive. Moreso, dollar will benefit as well from a respite in the confrontation between the two powers, analysts believe.
According to experts, the current tension of the EUR / USD pair, which is gathering strength before the next spurt, can result in a powerful rise. Although it can be followed by a decline, experts expect however, that the classic tandem will come out of this situation without losses, and will be able to make the most out of it.
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