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EUR/USD  had a week for the history books, surging hundreds of pips on Draghi’s failure to delivery. Is it beginning a long upwards path or has it reached a new balance?  The upcoming week features data from Germany and France.  Here is an outlook for  the highlights of this week and an updated technical analysis for EUR/USD.

The ECB cut the deposit rate by only 10bp  and did not increase monthly buys. The extension of the QE program by 6 months and the pledge to reinvest proceeds was certainly not enough for markets. Expectations, created by the same Draghi, were not met, and this sent EUR/USD skyrocketing close to 1.10 in a very dramatic move that included false headlines and  a failed attempt to promise more. Some of the data justifies doing less, but inflation doesn’t look good. In the US, Janet Yellen cemented a rate hike and the NFP was certainly satisfactory for the initial hike, as markets already look into 2016.

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

EURUSD technical analysis December 7 11 2015

  1. Eurogroup meetings: Monday, with all EU 28 ministers meeting on Tuesday. The finance ministers of the euro-zone convene to discuss the situation in Greece as well as  countries’ budget situation. Headlines regarding growth will be watched.
  2. German Industrial Production: Monday, 7:00. The euro-zone’s locomotive missed expectations on industrial output in the past 4 months, but positive revisions  followed as well. A drop of 1.1% in September.  A gain of 0.8% is on the cards.
  3. Sentix Investor Confidence: Monday, 9:30. This business survey surprised with a jump to 15.1 points in November. The fresh figure for December  could show a rise to 17.2 points.
  4. French Trade Balance: Tuesday, 7:45.  The second largest economy has seen a deficit of 3.4 billion in September and this is a relatively stable figure. A deficit of 3.3 billion is on the cards.
  5. Final GDP: Tuesday, 10:00. According to the  initial release, the euro-zone economies grew by 0.3% in Q3. This number will likely be confirmed now. It reflects slow growth.
  6. German Trade Balance: Wednesday, 7:00. Contrary to France, Germany enjoys a wide trade surplus, something that keeps the euro bid many times. A surplus of 19.4 billion was  seen in September and 19.2 billion is expected now.
  7. French CPI: Thursday, 7:45. The French figure feeds into the final all European number. The flash figure certainly disappointed.    Prices in France rose 0.1% in October and no-change is expected now.
  8. French Industrial Production: Thursday, 7:45. Industrial output advanced by 0.1% in France in October. Output is expected to fall by 0.1% this time.
  9. Jens  Weidmann talks: Thursday, 18:00. The president of the German central bank, the Bundesbank, has been in opposition to the latest measures by the ECB and reportedly voted against the last moves. We ill hear his opinions about the inflaiton forecast as well as other measures.
  10. German inflation figures: Friday, 7:00. Germany publishes its final CPI, which is expected to confirm the 0.1% m/m rise  initially reported. In addition, they release the Wholesale Price Index (WPI), which  dropped by 0.4% last time and is now expected to rise by 0.2%.
  11. Targeted LTRO: Friday, 10:15. The ECB published its Targeted Long Term Refinancing Operation results on a quarterly basis. These loans to  commercial banks come on the condition of lending the money to the real economy. More TLTRO implies less bond buying and the other way around. In the previous release, we have seen 15.5 billion euros, much lower than previous editions.

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar began trading below 1.0630 (mentioned last week), and looked down. It made a false break under 1.0530 only to shoot to the sky, peaking at 1.0980, just under the round 1.10 level.

Live chart of EUR/USD: [do action=”tradingviews” pair=”EURUSD” interval=”60″/]

Technical lines from top to bottom:

We start from higher ground this time.  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.  1.1070 is a double top in October and is the next line.

1.10 is a round number and  significant resistance.  1.09, which was a support line in October, is the next support line.

1.0830 was a post slide high seen in November and also a range separator..The next line is  1.0790, a minor line in the range.

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

The surprise from the ECB is huge. While Draghi and his colleagues will try to mitigate the rise of the euro using verbal intervention, their actions (or lack thereof) are stronger than words and they could only balance the moves, not more. Also in the US, we could see some consolidation before the rate hike next week.

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