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EUR/USD Gains Hold Despite Strong Upwards Revision To US GDP
A positive outlook for inflation from the European Central Bank’s latest Economic Bulletin has enabled the Euro to US Dollar exchange rate to notch up minor gains.
According to the latest Economic Bulletin, the ECB predicts that strong global inflation will push Eurozone inflation over 1% next year - its highest since the end of 2013 - which has boosted the EUR/USD exchange rate.
In the bulletin, the European Central Bank observes that;
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The single currency was trading slightly elevated against the US dollar during yesterday’s session and recovered some losses from earlier in the week. Although the increase was limited at 1.0498, the euro managed to add 13 pips to 1.0435. The 50-day MA acted as resistance and RSI failed to move in positive territory. Long-term attitudes remain negative targeting the support at 1.0365.
Yesterday, the EURUSD tried to rally but found enough resistance at the 10 day moving average to reverse and closed near the low of the day, in addition the currency pair managed to close within the previous day range, which suggests being slightly on the bearish side of neutral.
The currency pair continues to trade below the 10, 50 and the 200-day moving averages that should act as dynamic resistances.
The key levels to watch are: a Fibonacci extension at 1.0666 (resistance), a daily resistance at 1.0622, the 10-day moving average at 1.0476 (resistance), a daily resistance at 1.0462 and the new multi-year low at 1.0352(support).
Ahead of the holidays and along with decreasing liquidity the EUR/USD pair settled in narrow range today. The pair was seen very weak at the beginning of the week and on Tuesday reached lowest point for the last 14 years at 1.0351. The short-term resistance is seen at 1.0520 (100-day moving average) and higher at 1.0665 (late November and 14th December highs). Looking to downwards support is now located at 1.0365 (15th December low) and lower at 1.0320.
EUR/USD Weekly Forecast December 26-30
EUR/USD has shown resilience in the past week by staying below important support turned resistance from 2015 lows despite several attempts at the level. Nevertheless, technical developments in the week point to an exhaustion of the current downtrend, putting the pair at risk of a further correction in the upcoming week.
The upcoming week marks the last week of the year and volatility will be unpredictable. In some years, the year-end has accompanied strong trends with drastic fluctuations while in other cases the more volatile moves are seen in the first week of the new year. The past week was not volatile and the recovery in EUR/USD appears to be weak in trend at this point as compared to prior end of year trends.
Most high impact economic releases pertaining to the pair were released on Thursday and a brief spike following data above a horizontal level at 1.0462, marking 2015 lows, is likely to have eliminated some weak positioning. Out of the United States, durable goods orders were reported to decline 4.6% in November. The final reading of third quarter GDP pointed to a rise of 3.5% and the core PCE price index edged down to 1.6% on an annual basis.
High impacting scheduled economic data for release in the final week of the year remains relatively light. Out of the United States, consumer confidence will be released on Tuesday and the weekly unemployment claims on Wednesday. There is a bank holiday on Monday in both Europe and the United States.
The 2015 low at 1.0462 was a critical level for the pair in the past week and remains a critical pivotal point. An early week hold of the level resulted in a continuation lower, but following a marginal weekly low, the pair turned higher in a recovery. The horizontal level held the pair lower in the second half of the week aside from Thursday’s brief spike above the level. What has started to be a concern for bears, however, is that the level has failed to trigger a broader decline in the late week with support at 1.0430 holding the pair higher.
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On the last Friday’s session the EURUSD rose with a narrow range and closed near the high of the day, although the currency pair closed within Thursday’s range, which suggests being slightly on the bullish side of neutral.
The currency pair continues to trade below the 10, 50 and the 200-day moving averages that should act as dynamic resistances.
The key levels to watch are: a Fibonacci extension at 1.0666 (resistance), a daily resistance at 1.0622, the 10-day moving average at 1.0458 (resistance), a daily resistance at 1.0462 and the new multi-year low at 1.0352(support).