- Political woes to retake center stage in terms of price action.
- EUR/USD unchanged weekly basis, but bears gaining ground.
The EUR/USD pair ends the week as it started, stuck to a tight range just below the 1.1800 threshold. Loads of water run under the bridge, yet none of it could convince investors. And here comes winter holidays, which means that chances of seeing definitions during the upcoming days are quite limited.
Anyway, central banks passed doing pretty much what the market was expecting, having limited and short-lived effects on the pair. The US Federal Reserve raised its rates by 25 bps, maintaining its preview of three rate hikes for 2018, despite sluggish inflation. The ECB, on the other hand, maintained its monetary policy unchanged but highlighted the strength of economic growth, confident that it will end up boosting inflation.
The upcoming week will be the last one of the year to offer some relevant data, with EU November inflation and US Q3 GDP final revision outstanding. Yet unless the outcomes diverge from forecasts, they will pass by without affecting the pair.
Political headlines, on the other hand, are a totally different matter, particularly those coming from the US, as the tax reform is losing adepts among Republican Senators, and the fading enthusiasm over its approval will likely result weigh on the greenback. These days, worth keeping an eye on US equities, as the multi-year rally to record highs could suffer a major setback on profit-taking.
Technically, the failed attempt of the EUR/USD pair to surpass 1.1870 has been a major hit for bulls, as the level hasn't been surpassed now for two weeks in-a-row. The weekly bottom was set at 1.1717, a couple of pips above the relevant low set on November 21st at 1.1712, making of the area quite a relevant support for these upcoming days.
Weekly basis, technical readings lean the scale towards the downside, as the price was unable to regain ground above a flat 20 SMA, while the Momentum indicator maintains its bearish slope within negative territory. The RSI indicator in the mentioned chart lacks directional strength at 56, while longer-term moving averages head south, but below the current level. In the daily chart, technical readings also favor a downward extension for the upcoming days, as intraday attempts to surpass the 20 and 100 SMAs, where unsustainable. Both moving averages, however, stand pat, without directional strength, a clear sign of the ongoing range trading. Technical indicators in this last time frame have turned horizontal within bearish territory.
The pair is currently trading mid-way between its weekly range, also around the 23.6% retracement of its latest daily decline, which adds to the bearish case for the upcoming days. The immediate support is the mentioned 1.1710 region, followed by 1.1660. A break below this last could lead to a test of November low at 1.1550. An immediate resistance is the 1.1800/30 price zone, followed by the stronger 1.1870 area. Beyond it the pair could turn bullish, moreover it somehow it settles above 1.1930.
The FXStreet Forecast Poll shows that sentiment favors the greenback for these upcoming days, but just marginally. In the case of the EUR/USD, the pair is seen on average at 1.1753 for the upcoming day, with the most pessimistic being 1.1400, and the most optimistic 1.1950. The number of bears stands at 47%, well below previous 79%, probably as a consequence of a disappointing Fed. Bears remain side-lined in the longer perspectives, with bulls being the majority in the monthly view, and the pair seen neutral quarterly basis. In this last time frame, there's a quote wide target´s range, from 1.1247 to 1.2516, but the larger concentration being around 1.1600. The overview chart shows that there's no clear trend ahead, although as time goes by, a possible upward move is starting to show up.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
EUR/USD comfortable below 1.0800 lower lows at sight
The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.
Gold price finishes Thursday’s session set to reach new all-time highs
Gold price rallied during the North American session on Thursday and hit a new all-time high of $2,225 in the mid-North American session. Precious metal prices are trending higher even though US Treasury yields are advancing, underpinning the Greenback.
Bitcoin price extends retreat from $69K as old whales shift their holdings to new whales
Bitcoin price continues to move further away from the $69,000 threshold, gaining ground as BTC bulls hope for a retest of the $73,777 peak. This is because of the general assumption that clearing this blockade would set the tone for a reach higher, marking a new all-time high.
Bears have been standing before a steamroller so far this year
Despite a pushback on rate cuts from Christopher Waller, and what was supposed to be cautious trading sentiment ahead of critical US inflation data released later on Friday, the S&P 500 rose on Thursday, marking its best first-quarter performance in five years.