empty
16.12.2024 04:03 AM
Overview of the EUR/USD Pair for December 16; The Calm Continues, No Storm Yet

This image is no longer relevant

The EUR/USD currency pair attempted to break below the lower boundary of the horizontal channel it has been trading within for several weeks. In the 4-hour timeframe, the sideways movement is not very apparent, but in the lower timeframes, it is clearly visible. Consequently, the price rebounded from the channel's lower boundary and may now aim upwards again. The flat movement persists.

Last week, there were a few significant events, and even those were relatively uneventful. For instance, the inflation report failed to deliver any impactful results, and the European Central Bank meeting outcome was easily predictable. ECB President Christine Lagarde's statements also did not particularly impress traders. It seemed she only reiterated information that the market was already aware of. There was nothing positive in this for the euro.

The ECB signaled its intention to continue easing monetary policy, shifting its primary focus from inflation to economic growth. This implies that rate cuts could be deeper than the market initially expected. On Thursday, Lagarde struggled to answer where the "neutral" rate might be, indicating that the ECB prefers not to set specific targets to avoid being held accountable for unmet expectations. This leaves open the possibility of more significant monetary easing than previously anticipated.

Such information is unlikely to inspire euro buyers. Even without this, we maintained that the euro should continue its decline without any alternative. The euro appears to have exhausted its growth potential during 2022–2024, a period when it either rose or, at the very least, did not fall in situations where it arguably should have. Now, its only path seems to be downward.

The economic calendar for the upcoming week is packed with events. However, most key macroeconomic reports and fundamental developments will center on the pound and the dollar rather than the euro. Nevertheless, the euro will likely react to events such as Jerome Powell's speech, the Federal Reserve meeting, and Christine Lagarde's address (although it's unclear what new information she could provide). Europe will also release reports on business activity, inflation, retail sales, and other economic indicators.

As a result, the week may end with flat movement and a resumption of the downtrend. However, it's important to note that no one can predict what Powell will communicate to the market or how macroeconomic reports in the US and the EU will turn out.

Traders have every reason to anticipate further euro declines, as technical signals on almost all timeframes indicate bearish prospects. That said, it is always wise to account for alternative scenarios. In the markets, nothing can be guaranteed with 100% certainty.

This image is no longer relevant

The average volatility of the EUR/USD currency pair over the past five trading days as of December 16 is 66 pips, characterized as "average." On Monday, we expect the pair to move between the levels of 1.0437 and 1.0569. The higher linear regression channel is directed downward, indicating that the global downtrend remains intact. The CCI indicator has entered the oversold zone several times, triggering an upward correction, which is still ongoing.

Nearest Support Levels:

  • S1 – 1.0376
  • S2 – 1.0254
  • S3 – 1.0132

Nearest Resistance Levels:

  • R1 – 1.0498
  • R2 – 1.0620
  • R3 – 1.0742

Trading Recommendations:

The EUR/USD pair could resume its downtrend at any moment. For months now, we've been expecting only declines for the euro in the medium term, fully supporting the general bearish trend direction. The market has likely already priced in most or all of the Fed's future rate cuts. If this is the case, the dollar still has no reasons for medium-term declines, which was already a rarity to begin with.

If the price remains below the moving average, short positions can be considered, with targets at 1.0437 and 1.0376. If you are trading using "pure" technical setups, long positions can be considered if the price is above the moving average, with targets at 1.0620 and 1.0636. However, we do not recommend going long. Additionally, the pair has been in a flat market condition for three weeks.

Explanation of Illustrations:

Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.

Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.

Murray Levels act as target levels for movements and corrections.

Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.

CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.

Paolo Greco,
Analytical expert of InstaForex
© 2007-2024
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

USD/JPY: The Perfect Storm

On Wednesday, the pair also demonstrated an upward trend, but traders were reacting to the Federal Reserve's December meeting results. It can be said that the USD/JPY is experiencing

Irina Manzenko 23:28 2024-12-19 UTC+2

The Euro Accepts Its Fate

Fear often magnifies risks. The December FOMC forecast suggests two rate cuts of 25 basis points each in 2025, but nervous investors have interpreted this

Marek Petkovich 23:28 2024-12-19 UTC+2

USD/CAD. Analysis and Forecast

Today, the USD/CAD pair continues its steady intraday pullback from the highest level since March 2020. The decline can be attributed to some profit-taking amid overbought conditions on the daily

Irina Yanina 13:38 2024-12-19 UTC+2

What to Look Out for on December 19? A Breakdown of Fundamental Events for Beginners

A few macroeconomic events are scheduled for Thursday, and almost none are particularly significant. Germany will release the GfK Consumer Confidence Report in the Eurozone, which is considered entirely secondary

Paolo Greco 07:28 2024-12-19 UTC+2

Overview of the GBP/USD Pair December 19; Inflation in the UK Provided No Impact

On Wednesday, the GBP/USD currency pair had every chance to show an interesting, trend-driven intraday movement. However, nothing of the sort happened. Yesterday, the UK released one of the most

Paolo Greco 02:23 2024-12-19 UTC+2

Overview of the EUR/USD Pair for December 19; No Reaction Ahead of the Fed Meeting

The EUR/USD currency pair has essentially stopped trading and remains stagnant. Volatility has fallen to near-zero levels, prompting speculation that the market has effectively closed its books for 2024, opting

Paolo Greco 02:23 2024-12-19 UTC+2

EUR/USD trading flat quietly anticipating turbulence after Fed's announcement

The EUR/USD pair is trading within a narrow range as the market awaits the outcome of the December Federal Reserve meeting. Neither buyers nor sellers are willing to take large

Irina Manzenko 15:36 2024-12-18 UTC+2

What to expect from US dollar after Fed's "hawkish cut"

While Wall Street experts puzzle over how the US dollar will react to the nearest Fed's interest rate decision, and the ECB contemplates the future of European inflation, the EUR/USD

Marek Petkovich 15:09 2024-12-18 UTC+2

XAU/USD: Analysis and Forecast

Today, gold prices fluctuate within a narrow range, hovering between modest gains and slight losses ahead of the FOMC monetary policy decision, which is set to be announced later during

Irina Yanina 13:29 2024-12-18 UTC+2

USD/JPY: Analysis and Forecast

During the Asian session, the Japanese yen managed to modestly recover its earlier losses.However, sustained growth of the Far East currency is uncertain, especially as the Bank of Japan

Irina Yanina 13:27 2024-12-18 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.