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EUR/USD Forecast: Resting On A Former Relevant Resistance Level

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EUR/USD Forecast: Resting On A Former Relevant Resistance Level

EUR/USD Current Price: 1.1106

  • Lagarde's debut as ECB’s President made it clear that she’s a politician.
  • US President Trump tweeted a “big deal” is “very” close, lifting the dollar.
  • EUR/USD resting on a former relevant resistance level, bearish only below 1.1065.

The EUR/USD pair peaked at 1.1153 this Thursday, following the ECB’s monetary policy meeting, but falling afterward to 1.1100, on the back of trade war-related headlines. Mrs. Christine Lagarde, the new President of the European Central Bank, made a politic statement as expected. She was extremely cautious on her wording, avoiding the usual chaos the debut of a central bank leader usually triggers. Growth was revised slightly lower, inflation slightly higher, and the economic slowdown is signaling stability.  The EUR/USD pair rallied, as US data disappointed, with the October PPI up by less-than-anticipated and unemployment claims soaring to 252K in the week ended December 6.

And then came Trump. The US President tweeted that a “big deal” with China is “very” close, giving Wall Street a reason to reach record highs and helping the greenback to recover. Following his words, the Wall Street Journal reported that the US has offered China a 50% reduction in tariffs on  $360 billion worth of imported goods and suggested that the US won’t slap new levies, as scheduled, on December 15.

The UK elections are underway, and while clearly having a larger effect on Pound crosses, the market may tumble all together with the result. This Friday, the most relevant event will be US November Retail Sales, seen up by 0.5% in the month, white the Retail Sales Control Group is seen up by 0.3%.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair is resting just above the 23.6% retracement of its October rally at 1.1108, an area that capped advances in the last couple of weeks. If the pair breaks below it, the next support comes at 1.1065, the 38.2% retracement of the same advance. In the 4-hour chart, technical indicators have retreated sharply after reaching overbought levels, heading south almost vertically but in positive territory. The pair is holding above all of its moving averages, with the 20 SMA heading north above the larger ones, all of which indicate a limited downward potential as long as above the mentioned 1.1065.

Image Sourced from Pixabay

 

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