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EUR/USD[1] Price Setup:

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EUR[2]/USD[3] has fallen to a key level of support after falling short of the 1.2400 psychological level[4] late last week. With a range of high impact economic events[5] on the horizon the big question is whether bears can continue to push, or whether Fibonacci support will be able to contain the lows.

Euro Dollar Forecast: EUR/USD Stalls after Falling to Critical Support

Dailyfx, Economic Calendar[6]

While the probability of additional fiscal stimulus for the US has been priced into the market, higher treasury yields have helped buoy US Dollar[7] strength, pushing EUR[8]/USD[9] price action into a confluent zone of support that came into play several times throughout December 2020.

EUR/USD Technical Analysis

After recovering from March 2020 lows, the upward trend pertaining to EUR/USD prevailed, eager to test the 2018 high. However, following a test of the upper bound of the Bollinger Band[10] combined with the formation of a tombstone doji[11], EUR/USD bears were able to push prices lower until reaching a critical zone of support at 1.2134.

EUR/USD Weekly Chart

EUR/USD Weekly Chart

Chart prepared by Tammy Da Costa[12], IG

For now, prices remain in a short-term range-bound state, with the Moving Average Convergence Divergence[13] currently resting below the zero line, a potential indication that bearish momentum may prevail. Meanwhile the Relative Strength Index (RSI)[14] is within range, but remains faithful to the lower bound, at least in the short-term.

EUR/USD 4 Hour Chart

EUR/USD 4 Hour Chart

Chart prepared by Tammy Da Costa[15], IG

Should bulls take charge once again, a break above the key psychological level of 1.2200 could result in bullish continuation

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