Eur/usd - page 513
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The EUR/USD pair advaced slightly this week, still remains limited by the 1.0600 level. The macro data release on both sides the Atlantic couldn’t give enough strenght to set clear direction. The pair is currently consolidating and yet is capped by the 1.0700 level.
Yesterday the EURUSD rose with a narrow range and closed near the high of the day, although the pair managed to close within yesterday range, which suggests being on the bullish side of neutral.
The currency pair closed back above the 10-day moving average but is still trading below the 50 and the 200-day moving averages that are acting as dynamic resistances.
The key levels to watch are: a daily resistance at 1.0819 (resistance), a Fibonacci extension at 1.0666 (resistance), a daily support at 1.0622, the 10-day moving average at 1.0607 (support) and the all-time low at 1.0462.
EUR/USD Fails Break of Resistance
EUR/USD broke above first resistance in today’s trading, but failed to sustain the breakout and is trading off the highs, currently at 1.0643, down 0.17% from Thursday’s North American close.
First resistance is at Monday’s intraday high at 1.06855, which represents a failed test of the November 22nd intraday high at 1.0660. Clearing this level of resistance on a sustained basis would leave the next target at the 38.2% retracement of the November decline at the 1.07565 level.
Volatility has the potential to pick up in today’s trading, given the release of the US November jobs report. A stronger than expected number could work to boost the dollar once again, thereby resulting in another downdraft in EUR/USD.
Consensus estimates are calling for an increase of 180,000 jobs to be reported, compared to an increase of 161,000 posted last month. The unemployment rate is expected to remain unchanged at 7%. The strong ADP report released yesterday sets a positive tone for the BLS report coming out today.
The failure to clear first resistance on a sustained basis keeps the current consolidation phase intact and leaves EUR/USD at risk for another drop to key support at the low established in last week’s trading at 1.05183, which represents a test of key support at the December 2015 corrective bottom at 1.05237 as well as the major corrective bottom established in March 2015 at the 1.04590 level. A drop below the key zone of support would confirm a breakdown from a multi-month trading range, calling for further losses in EUR/USD on a longer term basis.
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USD Change in Non-farm Payrolls (NOV),
Actual: 178k
Expected: 180K
Previous: 142K
EUR/USD forecast for the week of December 5, 2016
The EUR/USD pair initially fell during the week but found enough support just above the 1.05 level to turn things around and form a bullish candle. The bullish candle of course signifies that the support is starting to hold, and with this I think that we are going to stay in the consolidation for a while at least. A bounce is likely, but I am more interested in selling that bounce than participating in it. Alternately, if we break down below the 1.05 level, I’m a seller at that point also.
EUR/USD Weekly Forecast December 5-9
After forming a base last week, EUR/USD extended higher in a recovery to post a small weekly gain. The rise has carried little momentum and has served to erase only a marginal portion of the losses incurred since the US elections. The bounce in the pair comes from an important support level at 1.0566 as the level previously held a decline in April 2015 and December 2015, triggering a notable turn higher on both occasions. The lackluster gains from the support level thus far suggest the downtrend remains intact and points to a higher probability for a downside break. Risk events in the upcoming week can introduce volatility as market participants will look to the ECB once again for forward guidance regarding the quantitative easing plans and an upcoming vote in Italy.
Data out of the United States this past week was generally positive but failed to trigger a continuation in the rally seen since mid-November. Non-farm employment gains were recorded at 178,000 to fall within expectations. The average hourly earnings came in weaker than expected with a decline of 0.1% while the unemployment rate improved to 4.6%, falling below what the Fed views as full employment. The second estimate of quarterly GDP printed at 3.2% versus a rise of 2.9% in the first estimate. The core PCE price index remained unchanged at an annual rate of 1.7%.
The outlook for a US rate hike remained relatively unchanged this past week with the CME Fedwatch tool indicating a 92.7% probability.
Eurozone data was reported to improve in the past week with annual flash CPI ticking up to 0.6% from a prior rise of 0.5%. The unemployment rate improved to 9.8% in October from a revised 9.9% in the prior month.
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The EUR/USD pair was seen higher at 1.0680, below the weekly high pinned at 1.0689, but quickly retreated and closed the week around 60 pips higher. In the upcoming days the focus will be set on the Italian referendum that was held today and the ECB's meeting next Thursday.
The EUR/USD pair slupmed sharply after the negative Intalian vote. The pair tested the 1.05, a level that has not been visited since March 2015. RSI is placed at negative territory, the stochastic is showing strong bearish momentum. Current market price is 1.0573. Resistance is seen at 1.0605 while support is located at 1.0507.