EURUSD Weekly Forex Forecast – 17th to 21st Dec 2018
The week ahead is expected to remain slow with only second tier data coming out. The week starts off with the flash inflation estimates from the Eurozone. The inflation data covers the month of November. Inflation data comes amid concerns that consumer prices are rising at a slower pace in the Eurozone. The only big event next week is the Fed’s monetary policy meeting. The short term fed funds rate are expected to rise by a quarter point, bringing the U.S. interest rates to 2.25% – 2.50%. This will be the last rate hike this year.
Officials will also be releasing their projections on the economy and interest rate projections for the next year. Following the Fed meeting, the Bank of Japan will be holding its monetary policy meeting. No changes are expected as the BoJ is widely expected to remain muted as it buys for more time for inflation to rise higher. On the economic front, the final revised GDP estimates for the third quarter will be released later on Friday. Investors expect to see no change to the third quarter GDP which is expected to remain steady at 3.5% on the quarter.
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Chart set up: The EURUSD currency pair continues to trade sideways within a range. However, price action over the past week has resulted in a head and shoulders pattern inside the range. By Friday’s close, the EURUSD broke past the neckline support triggering the head and shoulders pattern which could lead to further declines in the coming week.
Key support/resistance levels:
Support: 1.1241; Resistance: 1.1305
The EURUSD has maintained its range within the 1.1449 resistance and 1.1281 level of support. The head and shoulders pattern that has formed has resulted in price breaking below the neckline support formed at 1.1314. On Friday, price broke past this support level with a strong bearish candlestick pattern. This led to the euro currency slipping to the previously established lows. However, we expect price action to continue lower. The head and shoulders pattern gives a minimum downside target to 1.1241 which could be tested in the coming week. For the week ahead, the EURUSD is forecast to be bearish.
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