EUR/USD: downward trend will continue

Current trend

The European currency against the US dollar continues to move in the medium-term, downward channel. In early December, the pair broke through the bottom of the long-term uptrend, after which a downward channel has formed. In less than a week, the pair lost 150 points and reached the level of 1.1715. The main catalyst for the decline was an increase in investment attractiveness for the US currency in late November and early December this year. An additional factor in the decline was the weak macroeconomic data of Germany, the main economy of Eurozone, at the beginning of the month, namely, the reduction of key indicators and the decline in industrial production.

Today, the pair showed an upward correction on the stable final data on the consumer price index for November, but the main releases for today are inflation data, the Fed’s decision on interest rates and the following press conference.

Support and resistance

Starting out from the main macroeconomic data at the end of this year, the Fed is unlikely to continue its policy of tightening monetary policy and raising rates this year. The most likely scenario is the retention of the exchange rate and the transfer of rate hikes to the first quarter of 2018. In this case, the dollar may fall under sales and the upward momentum will increase, but despite this medium-term trade sentiment will remain in favor of the US currency. In this situation it is reasonable to increase short positions in the trend.

Technical indicators confirm the forecast, MACD shows the preservation of a high volume of short positions, Bollinger Bands are directed downwards.

Support levels: 1.1730, 1.1715, 1.1665, 1.600, 1.1575.

Resistance levels: 1.1785, 1.1800, 1.1830, 1.1880, 1.1900, 1.1925, 1.1980, 1.2030.

Trading tips

In the current situation it is important to open short positions from the current level with targets at 1.1665, 1.1600 and to place pending orders from levels of 1.1785, 1.1800 with stop-loss at 1.1830, 1.1840.

Euro vs US Dollar

Buy Sell Spread
1.18438 1.18414 24

Scenario

Timeframe Weekly
Recommendations SELL
Entry Point 1.1745
Take Profit 1.1665, 1.1600
Stop Loss 1.1830
Support levels 1.1575, 1.1600, 1.1665, 1.1715, 1.1730, 1.1785, 1.1800, 1.1830, 1.1880, 1.1900, 1.1925, 1.1980, 1.2030

Alternative scenario

Recommendations SELL LIMIT
Entry Point 1.1785, 1.1800
Take Profit 1.1665, 1.1600
Stop Loss 1.1840
Support levels 1.1575, 1.1600, 1.1665, 1.1715, 1.1730, 1.1785, 1.1800, 1.1830, 1.1880, 1.1900, 1.1925, 1.1980, 1.2030

EUR/USD: downward trend will continue

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