Learn To Trade
 
Indicators & Chart Patterns

Deepen your knowledge of technical analysis indicators and hone your skills as a trader.

Find your detailed guides here
Trading Glossary

From beginners to experts, all traders need to know a wide range of technical terms. Let us be your guide.

Learn More
Knowledge Base

No matter your experience level, download our free trading guides and develop your skills.

Learn More
Learn To Trade

Trade smarter: boost your skills with our training resources.

Create a live account
Market Analysis
 
Market News

All the latest market news, with regular insights and analysis from our in-house experts

Learn More
Economic Calendar

Make sure you are ahead of every market move with our constantly updated economic calendar.

Learn More
Technical Analysis

Harness past market data to forecast price direction and anticipate market moves.

Learn More
Live Webinars

Boost your knowledge with our live, interactive webinars delivered by industry experts.

Register now
Market Analysis

Harness the market intelligence you need to build your trading strategies.

Create a live account
Partnership
 
Affiliate Programme

Grow your business and get rewarded. Find out more about our Affiliate Programme today.

Learn More
Money Manager

Increase your income and get compensated for your trading knowledge with ThinkInvest, putting you in control.

Learn More
API Trading

Create your own trading platform or data tools with our cutting-edge APIs.

Learn More
Introducing Broker

ThinkMarkets ensures high levels of client satisfaction with high client retention and conversion rates.

Learn More
White Label

We supply everything you need to create your own brand in the Forex industry.

Learn More
Regional Representatives

Partner with ThinkMarkets today to access full consulting services, promotional materials and your own budgets.

Learn More
Partnership

Plug into the next-gen platforms and the trades your clients want.

Create a live account
About ThinkMarkets
 
About Us

Find out more about ThinkMarkets, an established, multi-award winning global broker you can trust.

Learn More
Security of Funds

Security of your funds is our number one priority. Find out more about our insurance policy with Lloyd's of London.

Learn More
Trading Infrastructure

When it comes to the speed we execute your trades, no expense is spared. Find out more.

Learn More
ThinkMarkets News

Keep up to date with our latest company news and announcements.

Learn More
Contact Us

Our multilingual support team is here for you 24/5.

Learn More
About ThinkMarkets

Global presence, local expertise - find out what sets us apart.

Create a live account
search
Create account

EUR/USD likely heading to 1.25 despite dollar rebound

Fawad Razaqzada Fawad Razaqzada 07/01/2021
EUR/USD likely heading to 1.25 despite dollar rebound EUR/USD likely heading to 1.25 despite dollar rebound
EUR/USD likely heading to 1.25 despite dollar rebound Fawad Razaqzada
The US dollar has started today’s session higher after the reserve currency found decent support Wednesday afternoon as US 10-year bond prices fell and yields rose along with equity prices. US 10-year yields rose above 1% for the first time since March as investor speculated that a Democratic sweep in the Senate could translate to further fiscal support for the economy if needed. As a result, the S&P 500 index hit a new record high and this morning the German DAX followed suit to hit new virgin territories, before pulling back a touch. With the Democrats gaining control of the government, we essentially now have a Washington put as well as the Fed put. Thus, if the economy were to deteriorate further in the coming months, there could be more support from the fiscal side, as well as monetary policy. Therefore, future dips in the stock markets are likely to be bought like before until at least when the Fed signals tightening.  Meanwhile, the dollar has done particularly well against the Japanese yen since Wednesday’s turn around and this morning it was up sharply against the euro as well. The single currency fell after the Eurozone retail sales came in well below expectations at -6.1% month-over-month, while the CPI measure of inflation was also weaker-than-expected at -0.3% y/y.

But is this a game changer, or a mere hiccup in the dollar’s downtrend? Could the EUR/USD bounce back anyway?

Well, with sentiment remaining positive towards risk assets and in particular value stocks, I reckon the weakness for the euro could be short-lived. Granted, there is a risk we may see further short-term weakness, but the underlying trend is bullish. Forward-looking investors are likely to favour European stocks relative to the overvalued US equities, if they continue to believe the world economy will bounce back and things will go back to normal. With EU stocks being relatively undervalued, we could well see further flows into European equities in the coming weeks and months. If so, demand for the single currency should rise correspondingly, thus limiting the downside potential for the EUR/USD.

Indeed, despite the slight weakness today, EUR/USD is stuck inside a rising channel, making higher highs and higher lows. It is slowly but surely closing in on the 1.25 handle and the 2018 high is just a spitting distance away now at 1.2555ish. I reckon it will get there in the coming days or weeks, because of the reasons stated above. But even from a purely technical viewpoint, there is currently very little bearish factors to point to on the chart. Yes, the momentum indicators might be at “overbought” levels and we may well have a bearish-engulfing-like candle on the daily today, but we have seen similar pattens in the past failing to derail the ongoing rally.  So, don’t be surprised if this turns out to be yet another case of a false signal for the sellers.  

EUR/USDSource: ThinkMarkets and TradingView.com
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

Learn more to earn more

our Education center

Related articles:

Stocks, pound extend gains and EUR/USD reboun...

By Fawad Razaqzada

21/01/2021

Gold extends recovery as dollar falls, yields...

By Fawad Razaqzada

20/01/2021

Stocks, metals and pound rise; dollar weakens

By Fawad Razaqzada

20/01/2021

Reflation trade boost for risk assets

By Fawad Razaqzada

19/01/2021

Euro faces key test with ECB and key data com...

By Fawad Razaqzada

18/01/2021

Meet our contributors
Mohammed Zidan
×
Mohamed Zidan
Chief Market Strategist, Dubai

Mohamed Zidan is a chief market strategist in Dubai and CFA Level III candidate. He reports to London office and has more than eight years of experience focusing on Forex, Commodities, Indices and global economic developments as well as central bank policies and intermarket analysis. worked as FX Analyst, and Strategist in several different organizations and for various departments. He holds a bachelor’s degree from Cairo University in Egypt. Mohamed Zidan is a regular guest on several major TV networks such as; CNBC Arabia, Fran24 Arabic, Alarabiya , Dubai TV, Sama Dubai, Skynews Arabia, Saudi National News, and Egypt National news.

Zidan presents insight to the markets movements, holds open discussions and relays possibilities related to the world’s financial market and economies.

Mohamed Zidan has been invited as a guest speaker for several international seminars. Zidan provides daily and weekly outlook for the markets. His experience ranges from currencies, commodities, stocks and options. he applies a top-down, global macro approach combined with price action to generate trade ideas and anticipate the next move.

Victor Golovtchenko
×
Victor Golovtchenko
Global Macro Analyst, Sofia

Victor Golovtchenko has been analysing and trading foreign exchange markets since 2004, and is actively involved in the online media space since 2014. His tenure as a Senior Editor at a major brokerage industry news outlet was followed with a breakthrough into the financial news space with the brand new TradeStar website.

As an affectionate macro-focused analyst, he has an integrated framework to look at financial markets as a whole, identifying gaps between currencies, stocks, bonds, and other asset classes to get a core complete picture of the macroeconomic environment.

Fawad Razaqzada
×
Fawad Razaqzada
Market Analyst, London

Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms. He leverages years of market knowledge to provide retail and professional traders worldwide with succinct fundamental & technical analysis. Fawad also offers trading education to help shorten the learning curves of developing traders.
 
His colleagues consider him an expert at reading price action on the charts. This together with his deep understanding of economics and fundamental analysis, and trading experience, puts him in a great position to forecast short term price movements. Fawad covers a wide range of markets, including FX, commodities, stock indices and cryptocurrencies and his comments are regularly quoted by the leading financial publications such as Reuters and Market Watch. In addition to ThinkMarkets, Fawad also provides analysis and premium trade signals on his own website at TradingCandles.com.
 
 

Carl Capolingua
×
Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

Mohammed Zidan
Mohamed Zidan
He has more than eight years of experience focusing on Forex, Commodities, Indices and global economic developments as well as central bank policies and intermarket analysis.
Victor Golovtchenko
Victor Golovtchenko
Victor Golovtchenko has been trading on the foreign exchange markets since 2004, and is actively involved in the online media space since 2014. His tenure as a Senior Editor follows his role with TradeStar.
Fawad Razaqzada
Fawad Razaqzada
Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms.
Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.

Feel confident?

Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
Back to top