EUR/USD made a move to the upside but eventually failed to stay there and retreated amid the ECB meeting. What’s next? Final inflation figures and a key German survey stand out. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
The ECB raised its growth forecasts but the optimism was confined to GDP and not inflation. The euro initially rallied but then retreated, as the door to more bond-buying is still wide open. Forward-looking PMIs support the notion that the euro-zone economies will continue outperforming, but the ECB seems to be waiting to see the white in inflation’s eyes. In the US, the Fed raised rates as expected but two members voted against a hike as inflation remains stuck. This hurt the dollar temporarily as the advances on tax reform and upbeat retail sales data helped the greenback.
EUR/USD daily chart with support and resistance lines on it. Click to enlarge:
* All times are GMT
EUR/USD Technical Analysis
Euro/dollar had a positive start to the week, moving up and hitting resistance at 1.1860 (mentioned last week). The gains did not hold and the pair eventually returned to lower ground.
Technical lines from top to bottom:
The cycle high of 1.2090 looms above. 1.20 is the obvious round level and also worked as resistance in September.
1.1950 was the high level seen in November and a stepping stone towards 1.20. 1.1860 capped the pair in August and in October while working as support in September.
1.1820 worked as a cushion to the pair in late November and works as weak support. 1.1760 served as a cushion in November and also played a role beforehand.
1.1710 was the high of August 2015 and also worked as support in November. 1.1670 was a swing low in October. and hasn’t worked too well.
The 2016 high of 1.1620 slowed down the pair also in October. 1.1555 was the low point in November and works as a cushion. It is followed by the round number of 1.15.
1.1445 is the June 2017 peak and immediate resistance. The next level of support is only 1.1370.
I turn from neutral to bullish on EUR/USD
After the pair wobbled amid all the noise from central banks, the week before the holidays could provide an opportunity for the euro to move up within the range. The Fed may change course in 2018 and the euro-zone’s higher growth expectations support a gradual rise.
Our latest podcast is titled A December to remember for EUR/USD
Follow us on Sticher or iTunes
- GBP/USD forecast – Pound/dollar predictions
- USD/JPY forecast – analysis for dollar/yen
- AUD/USD forecast – the outlook for the Aussie dollar.
- USD/CAD forecast – Canadian dollar predictions
- Forex weekly forecast – Outlook for the major events of the week.