Christmas FX markets: EUR/USD bearish, watch 1.0790


FXStreet (Guatemala) - The week ahead will likely be a quiet one, albeit still with some key US data components to go while desks will be light. However, that is not to say there can be no action as often in illiquid markets swings can be wild.

However, the stage is set for 2016 with the Fed having made lift-off and the guessing games around other Central Banks are a little less open with recent meetings offering a little more clarity from the likes of the RBA (neutral/dovish), RBNZ (dovish) , ECB (dovish), BoE (neutral/hawkish) and BoJ (neutral/dovish).

The divergence between them and the Fed remains the key driver and data will of course be key as we kick off the New Year. The biggest concerns will stay with EM's, commodity markets and China as driving forces and the biggest question will be how the Fed will be reacting, or how pro-active they will be in respect of events in Global markets, domestically and whether they can continue to increase their interest rates or be required to take a more dovish stance in disinflationary headwinds from overseas.

What will 2016 bring to the Forex traders?

In respect of 2016's outlook, last Friday, FXStreet wrapped up the year with an expert panel covering many of the questions on our minds and forecasting and debating the key possibilities and risks in the FX space in "What will 2016 bring to the Forex traders?" live session that anyone serious about trading FX might enjoy to watch here. Topics discussed were from the Yuan and China in the theme of the currency wars, oil prices and commodities, EM's and Central Banks to currency forecasts in particular.

For this week, keep an eye out for dollar repatriation, if there is anything less to do outside of option expiry, US GDP Q3, NZ trade balance and US durable goods, BoJ minutes, oh...and Santa Claus.

EUR/USD technically

Valeria Bednarik, chief analyst at FXStreet explained that EUR/USD technically speaking, has lost the bullish potential triggered by the ECB earlier this month, as it broke below 1.0880, right after FED's announcement, and held below it for the second half of the week. "The level represents the 38.2% retracement of the October/December decline, and as long as below it, gains should remain limited.

The 4 hours chart shows that the 20 SMA heads lower and converges with the mentioned Fibonacci resistance, while the technical indicators are turning south below their mid-lines, following a corrective movement from oversold readings, supporting further declines. Nevertheless, it would take a break through 1.0790 to confirm some steadier downward momentum during the upcoming days."

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