The Reversal in EUR/USD Looks Quite Sturdy

 

The Reversal in EUR/USD

EUR/USD turned quite bearish this year, falling around 650 pips, from 1.2350s to 1.17. Last year this pair was quite bullish, increasing quite 15 cents because the USD kept falling quite fast thanks to the increased political and social uncertainty within the US.

But the USD decline stopped within the first week of January this year and EUR/USD turned bearish. The decline was quite fast to be honest, which was justified by fundamentals also. The US economy is surging, including services that are expanding at the fastest pace on record, while in Europe this sector is in recession.

Except that, the restrictions in Europe are a whole lot harder, with lock-downs nonetheless persevering with. In the US, most of the inside has not seen lock-downs or such restrictions since the start of the coronavirus pandemic, which may be a major factor for the boom in services and therefore the economy generally.

Although, in the week we've seen a bullish reversal in EUR/USD which seems quite strong. this is often shown by the 20 SMA (gray) which has become support for this pair on the H1 chart. When the smaller MAs provide support on a smaller time-frame chart, then the trend is sort of strong. We are already long on EUR/USD, so we hope that the bullish momentum continues for a touch longer before the most bearish trend resumes again.