EUR/USD ready to resume uptrend in this busy week?
Fawad Razaqzada December 11, 2017 1:40 PM
The dollar failed to hold onto its earlier gains on Friday as investors concentrated more on the lower-than-expected wage growth than the better-than-expected employment gains.
The dollar failed to hold onto its earlier gains on Friday as investors concentrated more on the lower-than-expected wage growth than the better-than-expected employment gains. Market participants were wary of a busy week ahead and were therefore content with quick profits given the mixed-bag report. Indeed, this week is going to be rather busy for central banks as the Fed (Wednesday), SNB, BoE and ECB (all on Thursday) will be making decisions on their monetary policy stances. All bar the Fed are expected to keep their policy unchanged. The US central bank is widely expected to raise rates by another 25 basis points. But given that the hike is already over 98% priced in, it is unlikely to move the dollar when it happens. Still, investors will be paying closer attention to the policy statement, growth forecasts and press conference, in an attempt to gauge the continued path for rate hikes in 2018. In addition to these central bank meeting, we will have the latest inflation figures (Wed) and retail sales (Thursday) figures from the US, while in the UK it will also be inflation (Tues) and wages (Wed) data that will garner the attention of analysts and traders alike. That’s not all. Australian employment figures and Chinese industrial production (Thurs) will ensure Asian speculators are not left out of the fun.
Ahead of the Federal Reserve meeting and the release of above US macro pointers, the EUR/USD looks the most interesting pair out of the majors, at least from a technical stand point anyway. This pair formed a doji candlestick pattern on its daily chart on Friday, despite the stronger jobs data, as it found support from an existing inflection point between 1.1710 and 1.1750. Whether this marks the start of another up leg remains to be seen as we are still technically stuck inside a wide range. Indeed, the bears will be quick to point at the November high of around 1.1955 as a lower high compared to the September peak, and thus the start of a bearish trend. I, on the other hand, am still leaning more towards the bullish argument than bearish for two reasons. First, this year’s trend has been bullish and so far there hasn’t been a clear indication that the uptrend has ended. Second, the fact that the EUR/USD held above last year’s high of around the 1.16 area last month shows the buyers are still in charge. After the formation of a monthly bullish engulfing candle in November, the pullback at the start of this month could therefore represent an opportunity for the longer-term focused market participants to get on board at favourable rates. And Friday’s doji candle could be the short-term signal they were waiting for. However, a break below Friday’s range would invalidate this idea and in that case we may see a drop to the next levels of support at 1.1675 or 1.1615 before it decides on its next move.
Source: eSignal and FOREX.com.
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