The imbalance between Central Banks finally took its toll over the EUR/USD pair. In less than a week, both the ECB and the FED, made announcements on their upcoming December economic decisions, and whilst the first announced it may consider expanding its QE, the second suggested a rate hike.
The pair plunged around 450 pips and trades well below the 1.1000 figure, with a whole different fundamental scenario that the one we had before the ECB meeting. Clearly, Mario Draghi don't want an expensive EUR and his latest speech was more an effort to downgrade the currency's strength than a real warning of further easing. Nevertheless, he got what he wanted when the FOMC statement this Wednesday showed that officers are not concerned anymore about global woes, while putting back a rate hike on the table.
View the Live chart of the EUR/USD
Later today, the US will release its advanced GDP figures for the third quarter, expected at 1.6%. The final figure in the second quarter was 3.9%. A better-than-expected result should fuel the dollar's rally, whilst a poor result may see the American currency correcting lower.
Technically, the 4 hours chart shows that the RSI indicator has corrected some of the extreme oversold readings reached yesterday, but both, the RSI and the Momentum indicator, remain well below their mid-lines, the 20 SMA heads sharply lower above the current level, and around 1.1020, the level to break to confirm a stronger upward corrective move.
The immediate short term resistance comes at 1.0960, and a break above it is then required to confirm a continued advance towards the 1.1000/20 region. Renewed selling pressure below 1.0890 on the other hand, could see the pair extending its decline down to 1.0840 a major static support level.
Latest updates on the EUR/USD Forecast
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