EUR/USD analysis: neutral, more dull trading expected

Valeria Bednarik FXStreet

EUR/USD Current price: 1.0454

Major pairs are little changed when compared to their Friday's closes this Tuesday, with trading volume reduced to its minimum expression in this last shortened week of the year. The EUR/USD pair trades in the 1.0450 region, unchanged, despite better-than-expected US data, showing that manufacturing activity expanded in December in two districts according to different surveys. The Richmond index came in an 8 from previous 4, whilst the Dallas one printed 15.5 from previous 10.2. Also, consumer confidence increased to the highest level since August 2001, as the Conference Board Consumer Confidence Index hit 113.7 in December, beating expectations of 109.0, and above a previous upwardly revised 109.4.

From a technical point of view, the pair has made little progress, still contained below 2015 yearly low, although maintaining a strong neutral stance short term, amid reduced volumes all through the financial world. In the 4 hours chart, the price continues developing below a bearish 20 SMA, currently at 1.0530, while the Momentum indicator has continued correcting higher within negative territory, and the RSI indicator remains flat around 40, suggesting that the upward potential remains limited. The risk of a steeper upward move is also limited by fundamentals, given that macroeconomic data support the positive sentiment towards the greenback. Also, little downward action is to be expected as long as the price holds above 1.0420.

Support levels: 1.0420 1.0390 1.0350

Resistance levels: 1.0465 1.0500 1.0530

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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