EUR/USD Analysis - April 21, 2021

Upward Channel In Play

The EUR/USD closed at 1.2033 after placing a high of 1.2081 and a low of 1.2022. EUR/USD pair rose in the first half of the day and reached its highest since March 3, but it could not stay there for long and retreat from there ended up losing all of its daily gains. EUR/USD pair ended its day with losses as the U.S. dollar recovered its strength.

Earlier in the day, the currency pair EUR/USD preserved its bullish momentum as the greenback struggled to find demand. Nevertheless, during the second half of the day, the safe-haven appeal raised that changed the market mood, supported the U.S. dollar, and lifted the U.S. Dollar Index on a positive note.

The U.S. Dollar Index DXY was up by 0.15% on Tuesday at 91.22 and supported the greenback that weighed on currency pair EUR/USD. During early trading hours, the declining U.S. treasury yields weighed on the U.S. dollar helped EUR/USD pair to post gains and reach its highest level since early March. However, in late American hours, the market mood changed and shifted to risk-off, which helped the safe-haven U.S. dollar to find some demand and dragged the currency pair EUR/USD on the lower side.

The sentiment of the market changed after Chinese President Xi Jinping called for global solidarity in the face of a thriving anti-China front headed by the United States. He also warned that an open world economy was essential to recovering from the pandemic. Stresses between China and the U.S. have been intensified recently after the U.S. and its allies imposed sanctions on Chinese officials last month over alleged repression of Uighur Muslims and other ethnic minorities in Xinjiang Province, which was condemned and denied by Beijing. The harshest sanctions that the Trump administration imposed on China’s most prominent tech company also remained in place, along with the trade tensions that continue during the Biden administration. The rising tensions between the U.S. and China over the Taiwan issue have also escalated the dispute.

Xi said that bossing around or meddling in others’ internal affairs would not get one any support. He and did not mention name of any country but said that big countries should behave in a manner benefitting their status and with a greater sense of responsibility.

Meanwhile, the tensions between Russia and U.S. also escalated as the U.S. expressed its deep concerns over Russia’s plan to block foreign naval ships. The U.S. and its European partners were worried regarding Russia’s military build-up in recent weeks and they fear Moscow might be planning to invade Ukraine. All these geopolitical tensions raised the risk-off market sentiment and helped U.S. dollar find demand that ultimately weighed on EUR/USD pair.

On data front, at 11;00 GMT, the German Purchasing Price Index in March raised to 0.9% against the expected 0.6% and supported single currency Euro and pushed EUR/USD pair in first half of the day. On Thursday, ECB is set to announce its policy decision that is expected to have a significant impact over the movements of EUR/USD pair.

EURUSD Intraday Technical Levels

Support Resistance

1.1967 1.2074

1.1901 1.2115

1.1860 1.2181

Pivot Point: 1.2008

EUR/USD - Technical Outlook

On the technical front, the EUR/USD is exhibiting a choppy session at the 1.2020 level. The pair is facing immediate resistance at 1.2043 and 1.2112 levels. On the 4-hour timeframe, the EUR/USD pair has formed an upward trendline that is supporting a bullish trend in the pair. However, the formation of Doji and Spinning top candles below the 1.2043 level hurt the market’s bullish sentiment. On the downside, the EUR/USD’s support stays at the 1.1983 level, and break out of this level extends price action towards the 1.1928 level. Considering the RSI and MACD, the overall trading bias remains bullish as their values are holding at 59 and 0.0021, respectively. Trader’s primary focus will remain on the 1.2008 level, as this will be a trendsetter for the day. All the best!