EUR/USD Mid-Session Technical Analysis for January 5, 2021

The Euro is inching higher against the U.S. Dollar on Tuesday in a relatively lackluster trade. The gain in the single currency is likely in response to a weaker U.S. Dollar which gave back some of yesterdays rally as investors squared positions due to uncertainty tied to the U.S. runoff elections in Georgia.

The Georgia elections are the focus for investors today because they will decide which political party has control of the U.S. Senate. With the Democrats holding control of the House of Representatives and the White House, gaining control of the Senate would likely mean smooth sailing for President-elect Joe Bidens agenda, which may include an overhaul of the tax system, infrastructure spending and additional stimulus measures. All of which should drive up U.S. debt levels and weaken the dollar.

[fx-forecasts-cta instrument=eur-usd broker=etoro link=https://ad.doubleclick.net/ddm/clk/483366012;289793895;c disclaimer=75%_of_retail_CFD_investors_lose_money]

At 15:23 GMT, the EUR/USD is trading 1.2261, up 0.0011 or +0.09%.

In other news, German Retail Sales for November rose by 5.6% year-on-year. Analysts at Reuters presented a more cautious picture for the German economy, however, saying, The Statistics Office said its provisional full-year retail sales growth figure – contrasting with an expected drop of 5.5% in gross domestic product, according to Bundesbank data – included Decembers full lockdown.

‘It also said the estimate was “freighted with greater uncertainties” than usual due to the pandemic.’

Additionally, we also saw the release of the German Unemployment Rate for December, which confirmed consensus at 6.1%.

However, as Germany has extended its national lockdown, Euro investors are becoming increasingly concerned about the Euro Zones largest economy going forward.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.2310 will signal a resumption of the uptrend. A trade through 1.2059 will change the main trend to down.

The minor trend is also up. A trade through 1.2130 will change the minor trend to down. This will shift momentum to the downside.

The first support is a minor 50% level at 1.2220. The second support is a minor 50% level at 1.2185.

[fx-article-ad]Daily Swing Chart Technical Forecast

The inside move on Tuesday makes it difficult to predict a direction, which suggests were in a news driven market.

Since the main and minor trends are moving higher our bias is to the upside. We can approach the EUR/USD two ways: Play for a breakout over 1.2310 and hope for an eventual extended rally into the April 17, 2018 main top at 1.2413, or wait for pullbacks into the 50% levels at 1.2220 and 1.2185.

A failure to hold 1.2185 will indicate the buying is getting weaker and the selling is getting stronger.

For a look at all of todays economic events, check out our economic calendar.