EUR/USD Current price: 1.1750
- Progress on tax bill keeps the greenback on demand.
- Calendar turns scarce, volumes to shrink ahead of year-end holidays.
Having swang between gains and losses for most of the week, the greenback closed it marginally higher against its European rival, with the EUR/USD pair down for a third consecutive one. Fed's led losses were offset by news about the US tax reform, as Republicans plan to vote on it next Tuesday after the House and the Senate agreed on a final proposal. On Friday, and despite US data was softer-than-expected, with industrial production up by just 0.2% and capacity utilization down to 77.1%, the greenback edged higher against all of its major rivals. The upcoming week has little of relevance to offer from the macroeconomic side, with only outstanding EU November inflation on Monday, and the final revision of US GDP on Thursday. Heading into year-end holidays in the North Hemisphere, volumes will tend to shrink and will only return to normal after the first week of January.
Dollar's strength, beyond a less hawkish stance from the central bank, seems poised to extend into year-end, at least against its European rival, particularly if the Houses keep progressing with the tax reform. Nevertheless and once it's done, market players could move to the side-line ahead of Fed's February meeting, when the new head, Jerome Powell will take over and hopefully, clarify his stance.
Technically, the pair continues retracing November's gains and is poised to extend its decline, as it's trading below the 23.6% retracement of its December decline at 1.1770, after failing to surpass the 61.8% retracement of the same slide mid-week. In the daily chart, the pair is below its 20 and 100 SMAs, both lacking directional strength, while technical indicators resumed their declines within negative territory. Shorter term, and according to the 4 hours chart, the risk has also turned toward the downside, as the pair settled below all of its moving averages, while the Momentum indicator entered bearish territory as the RSI indicator heads south around 42. The pair has a major support around 1.1715, where it bottomed twice in the last four weeks.
Support levels: 1.1715 1.1660 1.1620
Resistance levels: 1.1770 1.1830 1.1870
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