FX.co ★ EUR/USD Hot Forecast, 2 February 2021

• Better-than-expected economic data may underpin the Euro against its major counterparts in the coming weeks.
• EUR/USD rates continue to consolidate the above key points.

The EUR/USD pair bounced from the 1.2060 region but remains below 1.21. The US dollar eases as equities stage a modest comeback as retail investors' frenzy temporarily cooled.

EUR/USD DAILY CHART – HEAD AND SHOULDERS TOP OR UPSIDE CONTINUATION?

The technical outlook for EUR/USD rates appears relatively mixed as price carves out a possible Head and Shoulders reversal pattern above a key range at 1.2055 – 1.2070. EUR/USD is supported by an ascending trend-line which holding the exchange rate since May 2020.

Remaining constructively positioned above 1.2050 could open the door for buyers to continue driving the exchange rate higher, with a break above the previous swing high ( 1.2180) probably carving a path to challenge the yearly high (1.2350)

Technical indicator prints bearish MACD divergence suggests that the exchange rates rally since November could be running out strength . The MACD histogram's notable decline in recent days also hints a fading bullish momentum.

However, a daily close below the January 18 low (1.2050) which coincides with Fibonacci support 38.2% retracement of its November/January rally, would likely validate the bearish reversal pattern and intensify near-term selling pressure. The Head and Shoulders implied measured move suggesting that price could fall from current levels to the psychological support at 1.1800.