Search ForexCrunch

EUR/USD  dipped to new lows but rebounded ahead of the Christmas holiday. The week between Christmas and New Year’s is quite light. Here is an outlook for  the highlights of this week and an updated technical analysis for EUR/USD.

Germany’s IFO  institute showed upbeat confidence in the continent’s largest economy, and also other measures such as the Current Account came out above expectations. The mood was dampened  by the attack in Berlin, that reminded everybody of the  election year. In the US, GDP growth beat expectations  with 3.5% and also durable goods  orders looked promising. However, personal spending and income missed estimates.

[do action=”autoupdate” tag=”EURUSDUpdate”/]

EUR/USD daily graph with support and resistance lines on it. Click to enlarge:

  1. Monetary data: Thursday, 9:00. The European Central Bank monitors the money in circulation and growth in loans. While these have both recovered, October’s numbers were something of a setback. M3 Money Supply decelerated to 4.4% while private loan growth remained stuck at 1.8%. M3 is projected to remain unchanged but loans carry expectations for a tick up to 1.9%.
  2. Spanish Flash CPI: Friday, 8:00. Just before New Year’s celebrations, Spain releases preliminary data for inflation. This stood at an annual rate of 0.7% back in November and an acceleration to 0.9% is on the cards. The rise in consumer prices is attributed to the diminishing effect of falling oil prices.

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar dipped towards the 1.0340 level (mentioned last week) before bouncing back and trading under the 1.0460 level.

Technical lines from top to bottom:

1.0710 is the upper resistance line on the  chart after temporarily capping the pair in April 2015.  1.0690 is the  post-Trump high. 1.0570 is the bottom of the range seen afterward.

Further below, the early 2016 low of 1.0520 and the 2015 low of 1.0460  are seen. 1.0460 seems to carry more weight.

Even lower, there are two significant barriers on the way to parity. The 1.0340 level was the low of 2003 before the pair advanced to higher ground. The 101.50 level was a peak seen in 2002, on the first attempt of the pair to break above parity.

And then, there is EUR/USD parity.

I am neutral on EUR/USD

The week between Christmas and New Year’s Eve is usually quiet. End-of-year portfolio adjustments could trigger some irrational moves, but they could be limited. The trend remains to the  downside: monetary policy divergence is starker than beforehand. However, the next move could wait for 2017.

Our latest podcast is titled  What will move markets in 2017

Follow us on Sticher or iTunes

Safe trading!