The pair will likely keep rising as bulls target the 50% Fibonacci retracement level at 1.1440.
Bullish View
Bearish View
The EUR/USD pair drifted upwards on the first trading day of the year. The pair is trading at 1.1373, which is about 1.70% above the lowest level in 2021.
Volume to Start Rising
The EUR/USD pair rose slightly last week amid a low-volume environment. Most traders and investors were away last week to celebrate the Christmas holiday and New Year.
At the same time, there were no major economic data from Europe and the United States. The most important numbers were the US pending home sales and the home price index.
The situation will start to reverse this week as more investment companies are set to reopen. Also, there will be key economic numbers that will move the EUR/USD pair.
On Monday, Markit will publish the latest manufacturing PMI numbers from the US and the European Union. Economists expect the data to show that the Eurozone manufacturing PMI rose to 58.0 in December even as the Omicron variant continued spreading. In Germany and France, the PMI is expected to have risen to 57.9 and 54.9, respectively.
Meanwhile, in the US, data by Markit is expected to show that the PMI declined to 57.8 while another one from the Institute of Supply Management (ISM) is expected to show that the manufacturing PMI declined slightly to 60.1.
The EUR/USD pair will also react to the rising number of Covid-19 cases in Europe and the United States. In the US, the seven-day average in the past seven days has been more than 340,000. Similarly, the number of cases has been positive in the past seven days.
Therefore, there is a likelihood that the number of cases will keep rising because of the Christmas season interactions. Still, the only positive is that the variant is relatively mild.
EUR/USD Forecast
The EUR/USD pair has been in a tight range in the past few weeks. On Thursday and Friday, the pair managed to tilt upwards and crossed the key resistance at 1.1357. It also moved above the 25-day and 50-day moving averages (MA) while the Relative Strength Index (RSI) has tilted upwards. The MACD has also been rising. It is also along the 38.2% Fibonacci retracement level.
Therefore, the pair will likely keep rising as bulls target the 50% Fibonacci retracement level at 1.1440. This view will be invalidated if it drops below 1.1350.
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