EUR/USD is likely to have a week to remember. With volatility on the rise and many key events ahead, the market is about to start, what could be a historic December. After six months of closing between 1.09 and 1.12, the pair broke decisively to the downside and is about to post the lowest monthly close since 2002.
Currently, EUR/USD is moving with a clear bearish bias, in line with the dominant trend. Expectations of a rate hike in the US (the first since 2006) and more easing by the European Central Bank continue to be behind the decline and is likely to keep pressuring the pair. Next week will be very important for the euro and also the dollar.
The ECB will announce (or not) more easing measures and remove the uncertainty surrounding the meeting, giving support to the euro or opening the doors to more slides. In the US, the next Fed announcement will be December 16, but next week there will be two presentations of Janet Yellen and also the latest US employment report before the decision. A rate hike message from Yellen and a strong NFP report could increase even further expectations of a lift-off favoring the US dollar.
A combination of more easing by the ECB and a strong US jobs report could send EUR/USD below 2015 lows located at 1.0460 and would open the doors for a decline toward parity. The pressure on EUR/USD could continue until after the Fed’s decision when the pair could start to stabilize.
View the Live chart of the EUR/USD
From a technical perspective, the pair is moving to the downside with indicators supporting the bias in every time frame. In the monthly chart, Momentum broke again below the 100 line, while in the weekly chart it appears to be targeting 2015 lows and RSI is moving south still above extreme levels. The price is well below key daily moving averages and since October 15 it has been falling constantly without important corrections. So far there are no signals of a corrective move; but if it happens it could be significant, not necessarily stable, amid profit taking and probable squeezes. The question is where or when could the correction start.
To the upside, if it rises and holds above 1.0650, it could remove some bearish pressure. On a wider perspective, as long as it remains below 1.0850, any rally should be considered corrective; only a consolidation above could suggest that a bottom has been reached. In the short-term, a close on Friday under 1.0600, would clear the way for a test of 1.0460; below here a potential target comes at 1.0250 and then 1.0000 would be exposed.
Over the next days, volatility could rise sharply with EUR/USD moving up and/or down, particularly during Thursday and Friday. Traders should take this into account in order to avoid undesired (excessive) losses.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
EUR/USD comfortable below 1.0800 lower lows at sight
The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.
Gold price finishes Thursday’s session set to reach new all-time highs
Gold price rallied during the North American session on Thursday and hit a new all-time high of $2,225 in the mid-North American session. Precious metal prices are trending higher even though US Treasury yields are advancing, underpinning the Greenback.
Bitcoin price extends retreat from $69K as old whales shift their holdings to new whales
Bitcoin price continues to move further away from the $69,000 threshold, gaining ground as BTC bulls hope for a retest of the $73,777 peak. This is because of the general assumption that clearing this blockade would set the tone for a reach higher, marking a new all-time high.
Bears have been standing before a steamroller so far this year
Despite a pushback on rate cuts from Christopher Waller, and what was supposed to be cautious trading sentiment ahead of critical US inflation data released later on Friday, the S&P 500 rose on Thursday, marking its best first-quarter performance in five years.