EUR/USD bears are looking for a downside extension into weekly demand. Bulls, however, could step in prior to the next downside impulse. EUR/USD is trading better offered, licking its wounds around 1.1820, down some 0.2% on the day. EUR/USD fell from a high of 1.1853 to a fresh weekly low of 1.1812 and there could still be more to come in USD strength. Firstly, Asian shares slid to a two-week trough on Wednesday while the greenback moved in on four-month highs as coronavirus lockdowns in Europe and potential US tax hikes hit risk appetite, leading to a flight to safety. There was some rest bite in the US dollar in Europe on positive economic UK and EU PMIs calmed nerves. However, despite a bullish early start on Wall Street, the greenback has recovered again and made fresh highs in New York, helped by US Treasury yields recovering from one-week lows. At the same time, concerns about the economic impact of COVID-19 linger which has led investors to show a preference for the US currency which could be a theme that will continue for a while longer. The US dollar can continue to strengthen further this year, as yields continue to rise by more in the US than in most other developed markets. It boils down to the divergence of economic recoveries and the pace of the vaccine rollout between the EU and the US in particular. The combination of significant fiscal stimulus and a successful vaccine programme means the US, in stark contrast to the EU, could be headed for a very strong recovery. As for rates, the EU’s policymakers are singing from a different hymn sheet to that of the Fed’s. The Fed is willing to accept higher long-term yields due to optimism about the recovery while the EU is not. The European Central Bank has already signalled it would be bringing forward bond purchases. Meanwhile, the latest restrictions in the EU likely setback the economic every even further and investors continued to exit long euro positions. According to the latest CFTC positioning data, EUR net longs have continued to dropped and are at their lowest since June 2020 while for the first time since early June 2020, speculators’ net positions have turned long USDs. This followed a reduction in shorts in recent weeks. Hence, the technical outlook has soured from a long-term perspective. EUR/USD technical analysis The weekly chart above shows that there is a bearish bias all the way into the demand zone. The daily chart below shows that the price closed below the 200-day SMA on Tuesday and is printing a lower low on Wednesday. That being said, an upside correction will come in handy for the bears seeking a discount and a confluence of old support, the 200-day SMA and a 38.2% Fibonacci area could be targetted prior to the next bearish impulse. FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next USD/JPY fails to break above 109.00, looks to post modest daily gains FX Street 1 year EUR/USD bears are looking for a downside extension into weekly demand. Bulls, however, could step in prior to the next downside impulse. EUR/USD is trading better offered, licking its wounds around 1.1820, down some 0.2% on the day. EUR/USD fell from a high of 1.1853 to a fresh weekly low of 1.1812 and there could still be more to come in USD strength. Firstly, Asian shares slid to a two-week trough on Wednesday while the greenback moved in on four-month highs as coronavirus lockdowns in Europe and potential US tax hikes hit risk appetite, leading to a flight to… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.