EUR/USD Forecast: back in bearish mode ahead of the FED
|The EUR/USD pair consolidated its losses around the 1.0600 level for most of the last two sessions, holding between 1.0588 and 1.0629 ever since Draghi announced the latest ECB economic policy decision. The ECB has extended its QE program until December 2017, but between April 2017 and the new proposed end, it reduced the size of the bond purchases to €60 billion, from current €80 billion. Draghi added that taper was not discussed, while risks to growth remain towards the downside, overall highlighting the divergences between the Union and the US, where a rate hike is expected to be announced next week.
Data released so far today showed that the trade balance's surplus shrank in Germany, down to €20.5B in October, from a previously revised €21.1B. Exports grew by 0.5% from previous -1.0%, while imports rose by 1.3% beating expectations of 1.0%. Later today, the US will release its Michigan Consumer Sentiment Index for December, and Wholesales Inventories for October. The first will, indeed be the most relevant.
From a technical point of view, the risk has turned back towards the upside, although intraday, the latest consolidation has left indicators without directional strength. In the 4 hours chart, the pair has been steadily meeting selling interest on approaches to the 100 SMA, while technical indicators remain horizontal near oversold levels.
A break below 1.0580 is what it takes to see further slides today, with the next intraday supports at 1.0540 and 1.0500. A recovery above 1.0630 can see the pair correcting higher towards 1.0670/90, although selling interest will likely surge around this last.
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