EUR/USD gained some ground ahead of the Christmas holiday and edged closer to 1.10. The last week of the year features two figures. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
Spain’s elections resulted in a hung parliament and this stirred some worries, worries that support the euro on safe haven flows. However, some of the moves are related to end-of-year action. In the US, we learned that final GDP is 2% in Q3, within expectations. Housing disappointed while durable goods orders were OK.Updates:
EUR/USD daily graph with support and resistance lines on it. Click to enlarge:
- Spanish Flash CPI: Wednesday, 8:00. The euro-zone’s fourth largest economy has seen significant growth and also significant inflation. Prices fell 0.3% in November y/y and now we gets preliminary data for December. A rise of 0.1% is expected.
- Monetary data: Wednesday, 9:00. The ECB’s loose monetary policy is making its way into the system via money supply and more private loans. The former has risen 5.3% y/y and 5.2% is now on the cards. The latter saw 1.2% and 1.3% is on the cards now.
* All times are GMT
EUR/USD Technical Analysis
Euro/dollar was contained under 1.0880 mentioned last week. It then climbed gradually towards 1.10 but closed at a safe distance from this line.
Live chart of EUR/USD:
Technical lines from top to bottom:
1.13 worked as support back in October and is the high line at the moment. It is followed by the swing low of 1.1220 in September which is minor resistance now.
1.1140 cushioned the pair in October. 1.1050 is the high seen in December and the next challenge on the upside.
1.10 is a round number and significant resistance. 1.0925, which was a support line in December, is the next support line. It is closely followed by 1.0880 which is weak resistance in the range.
The round level of 1.08 worked as a double bottom in December and should be watched. 1.0710 is the next support line on the chart after temporarily capping the pair in April 2015. 1.0630 worked as nice support in November 2015 and then switched to resistance.
It is the last line before plunging to 1.0530, that supported the pair in April. Below, the 12 year low of 1.0460 seen in March.
I am neutral on EUR/USD
In the week leading to Christmas, the euro strengthened but for no good reason. We may see some choppiness leading to the close of the year, but nothing extraordinary. Monetary policy divergence should see further downside later on, but probably not now.
Our latest podcast is titled The Fed Awakens, and what’s next?
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD to USD forecast.
- USD/CAD (loonie), check out the Canadian dollar forecast
- For the kiwi, see the NZDUSD forecast.