EUR/USD analysis: biased lower, but EUR bulls still fight back

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1607

US data failed to surprise, but anyway strong.
Politics and sentiment will likely drive the way this week.

The American dollar managed to close the week higher against most of its major rivals, except for the Canadian dollar, after a soft start to it. The corrective movement that begun on Monday saw no follow-through, nor the greenback resumed its previous momentum, amid the tepid outcome of the first-tier events that took place in the US. The EUR/USD pair, topped for the week at 1.1689, to close it flat at 1.1607. The Federal Reserve had a "non-live" monetary policy meeting on Wednesday, and as largely expected, left rates unchanged while maintaining alive a possible December hike. On Friday, the US released its monthly employment report, showing that it created 261,000 new jobs in October, a good number that anyway fell short of expectations of 310K. The unemployment rate fell to 4.1% from previous 4.2%, while wages were a big disappointment, flat on the month and up by just 2.4% YoY. Also, the services PMI, the official and the Markit one released last Friday, indicated solid growth in the sector, although the Markit PMI suffered a modest downward revision from its early estimate. The upcoming week´s macroeconomic calendar will offer little of interest from these two major economies, which means that focus will be on politics and sentiment, this last, measured through equities and yields.

Technically, the pair retains the bearish bias in its daily chart, as the recovery pared well below the 20 and 100 DMAs, with the shortest gaining strength downward below the largest. Indicators in the mentioned time frame turned south within bearish territory after correcting oversold conditions, as the price settled above the multi-month low set late October at 1.1574. In the shorter term an according to the 4 hours chart, the technical stance is neutral-to-bearish, as the price settled below all of its moving averages, with the larger ones far above the current price and with strong slopes downward, but indicators lacking directional strength, anyway below their mid-lines. An extension downward below the mentioned low should favor a decline towards the 1.1460 region a major resistance level all through 2015 and 2016.

Support levels: 1.1575 1.1540 1.1510

Resistance levels: 1.1630 1.1670 1.1700

View Live Chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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