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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.

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

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

EURUSD December 28 January 1 2016

  1. 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.
  2. 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: [do action=”tradingviews” pair=”EURUSD” interval=”60″/]

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.

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