EUR/USD analysis: dollar's recovery menaced by US tax reform jitters
EUR/USD Current price: 1.1664
- US tax reform jitters kept the dollar under pressure.
- A more lively macroeconomic calendar to set the tone this week.
The EUR/USD pair closed the week with modest gains at 1.1664, as on Thursday, the greenback came under selling pressure amid mounting uncertainty about the US tax reform, a movement that extended into Friday´s close. A different version of the tax-reform bill presented by the GOP Senate, which includes a one-year delay, was the catalyst behind dollar's decline. The absence of relevant macroeconomic releases all through these last few days added to the relevance of the yet unconfirmed announcement, with plummeting Wall Street leading the way lower. By the end of the week, the release of the US preliminary November Michigan Consumer Sentiment Index weighed further, as consumer sentiment as measured by the index dropped to 97.8 from previous 100.7.
A more interesting macroeconomic calendar will be out this week, with relevant releases coming from both economies, starting Tuesday with German inflation. Most notable headlines will come from EU GDP and inflation, and US inflation and retail sales among others. Additionally, several Fed speakers will hit the wires, with investors looking for clues ahead of the Fed's December meeting.
From a technical point of view, this latest advance of the common currency seems barely corrective, as in the daily chart, the pair stalled its advance after failing to surpass a bearish 20 DMA, which daily basis has widened the distance with the 100 DMA. Indicators in the mentioned time frame corrected overbought conditions, but lost their strength upward well below their mid-lines, now turning lower, indicating that further technical confirmations are required to see the pair advancing. In the 4 hours chart, the 20 SMA heads higher below the current level, but the pair met selling interest around a bearish 100 SMA. The RSI indicator has begun easing after reaching overbought readings, but the Momentum maintains its bullish slope, suggesting further advances are likely. The pair is trading at the key 1.1660 region, with an immediate resistance at 1.1690, where it topped earlier this month. A steadier recovery beyond this last should keep the pair on the bullish side, at least short-term.
Support levels: 1.1620 1.1690 1.1550
Resistance levels: 1.1690 1.1720 1.1750
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.
