UOB Group’s FX strategists believe the EUR/USD will break beyond the 1.1400 mark within the next few weeks.
Yesterday, EUR fluctuated between 1.1293 and 1.1347, narrowing the projected sideways trading band of 1.1290/1.1370.
The overarching theme looks to have softened slightly, and the EUR is expected to fall to 1.1280. A clean breach of this level seems doubtful for the time being, and the solid support around 1.1240 is not anticipated to be threatened.
A break of 1.1350 (minor opposition is at 1.1330) on the upswing would imply that the present slight negative pressure has subsided.
Next 1-3 weeks: The experts’ forecast from Wednesday (Dec. 01, spot at 1.1335) is unchanged. As previously said, the EUR is expected to trade with an upward tendency around 1.1410.
Because the rising impulse has not significantly improved, a prolonged advance over 1.1410 is doubtful. On the downside, a break of 1.1240 (no change in yesterday’s ‘strong support’ level) would signal that the EUR is not prepared to go towards 1.1410.
EUR/USD CHART Source: Tradingview.com
EUR/USD has fallen over the previous two days after failing to breach the 100-day simple moving average, which was at 1.1320 at the time. The MACD line, which flashed a bear cross, is also in favor of the selling.
However, a convincing downward breach of the one-week-long rising support line, at the very least around 1.1255, is required for the pair sellers to go for the annual low of 1.1186.
After that, the market will focus on the 61.8% Fibonacci Expansion (FE) of November 09–30 movements near 1.1120.
Review Of The Fundamentals
The prior day’s hawkish Fedspeak, headed by Federal Reserve (Fed) Bank of San Francisco Head Mary Daly and Richmond Chairman Thomas Barkin, fueled US Treasury rates.
Softer-than-expected US Initial and Ongoing Unemployment Reports for the week, as well as dismal Challenger Job Cuts for November, also aided bond selling.
It should be noted that the Eurozone jobless rate fell in November, which pleased the European Central Bank (ECB) hawks. According to the most recent Reuters reports, the European central bank suggested a less hawkish stance during its December meeting.
Furthermore, following Thursday’s meetings in Washington, the European Union (EU) and the United States (US) criticized China’s movements in the South China Sea and Taiwan, adding to Beijing’s requests for the US to reduce tariffs on their exports, weighing on market sentiment.
Among these bets, US 10-year Treasury rates quickly recovered from 10-week lows set the day before, but S&P 500 futures also lost 0.12% intraday by press time.
Additionally, the US Dollar Index (DXY) climbed 0.05%, rising for the third day in a row to about 96.17.
Heading forward, the ECB’s Head Christine Lagarde and Eurozone retail sales for November may entice EUR/USD speculators, but the main focus will be on the US employment data and the ISM Services PMI for the previous month.