The EUR/USD pair remained within a 150 pips range these past few days, stuck around the 1.0700 level for a second week in-a-row. The pair has, however, established a lower low for the month at 1.0616, weighed once again by the imbalance between both Central Banks, as both, the FED and the ECB had released the minutes of their latest meetings this week.
Nevertheless, neither offered something new. Is clear that Mario Draghi and Co at the ECB is determinate to keep the EUR lower, by repeating time after time that more easing can and will be applied next December, to achieve the 2.0% inflation target. Additionally, Draghi addressed the European Banking Congress in Frankfurt, and while starting its comments by asserting that the policy measures have worked, he also said that growth momentum remains weak, and therefore anticipated again more stimulus steps before the year end.
As for the US Federal Reserve, the minutes released last Wednesday showed that most members consider it could be appropriate to lift rates in December should the economic data continues to improve. There was a slight change in the wording, with policymakers opening doors for a rate hike albeit without actually confirming it.
View the Live chart of the EUR/USD
Overall, the macroeconomic background remains the same ever since late October, with investors holding their breath until next December, when one Central Bank is expected to ease further, and the other begin tightening. Whether they act or not, indeed December is going to be a "Dec-bacle" across the financial markets. In the meantime, investors will continue pricing in any piece of data in accordance to how it could affect economic policy decisions.
Technically, the pair maintains a clear bearish tone, as the daily chart shows that the price is well below a bearish 20 SMA, whilst the decline extended further below the 100 and 200 SMAs, both lacking directional strength around 1.1100. In the same chart, the technical indicators have bounced from oversold levels, but the RSI is losing upward strength and turning back south around 35, in line with a continued decline. In the weekly chart, the technical indicators presents a strong bearish momentum well below their mid-lines, pointing for a retest of the year low of 1.0460 during the upcoming days, particularly on a break below 1.0600. Should the price extend its decline, the next bearish target for this week comes at 1.0250/60, e route to parity, not yet seen, but likely in December, if both Central Banks do as promised.
Approaches to the 1.0800 level are still seen as selling opportunities, with a recovery above it anticipating an upward corrective movement up to 1.0940. Even up to this last, the longer term bearish outlook will remain bearish, and selling interest will likely be stronger if the price approaches to this last.
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