eurusd

EUR/USD managed to close the week with gains, as the rally ignited by the European Central Bank (ECB) last week extended further, taking the pair to its highest level in over a month. 

The ECB announced more stimulus measures (but less than what most market participants were expecting) providing tailwinds for the euro  and pushing EUR/USD above its daily 20-MA. The ECB decision changed the pair’s short-term outlook, removing US dollar strength. 

US dollar even failed to benefit from a strong nonfarm payrolls report as it did little to change expectations of a rate raise ahead of the Federal Reserve meeting. As investors adopt a cautious stance before the verdict, the greenback has faced more weakness over the last days. 

Against this backdrop, EUR/USD continued to advance during the last five days, but it was limited by 1.1000 - 1.1050 (100-day and 20-week MA), that has become a key region to watch in the short term. 

FOMC decisive meeting 


At this point, the liftoff at the December 15-16 meeting seems a done deal for most analysts
, following strong signals from Janet Yellen and other FOMC members. With odds of a rate hike now above 80%, market focus will be less on the decision and more on the language and what the bank says about the future path of rates. For the same reason, the US dollar reaction could be limited.

The Fed will also publish its economic projections on Wednesday, but it is unlikely forecasts will be revised lower as recent economic data has been encouraging and risks from abroad have lowered.

EUR/USD technical perspective


View the Live chart of the EUR/USD

The technical outlook continues to favor the euro with Momentum moving to the upside price significantly above the 20-day MA.

With the FOMC ahead, volatility is likely to increase during the next days. Next weekly close will be very important, as with the FOMC meeting left behind, traders will see how much of the decision and the language of the Fed was discounted on the price. 
If the EUR/USD climbs and holds above 1.1050, it could extends gains to 1.1250 and from there eyes would turn to the key medium term resistance around 1.1500; above this latter, the euro would gain further support for an extension of the recovery or for a stabilization.

On the opposite direction, the immediate key support could be seen around 1.0800, that is also where the 33-day MA stands. Below here 1.0670 would be exposed and then the support area around 1.0500 - 1.0550; lower price levels would favor a test of multi-year lows at 1.0480.  

Latest updates on the EUR/USD Forecast

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