Technical Outlook: As noted in last week’s commentary EURUSD fell below 1.0400 support last week but only briefly as prices were rejected strongly below this level. The 4-hour chart on EURUSD has been consolidating into a descending wedge pattern which could signal a potential change of trend in the short term. The correction will be validated if EURUSD breaks out above 1.0520 resistance level. The median line shown on the chart is likely to signal a buy on a breakout from the outer median line with prices initially targeting 1.0520. Above 1.0520, EURUSD could be seen extending gains towards 10700. The Stochastics oscillator is currently showing a bullish divergence as well, which could potentially see EURUSD post a correction to as high as 1.0850. To the downside, if 1.0520 resistance holds the rally, then EURUSD could remain range bound within 1.0520 – 1.0400 levels.
Fundamental Outlook: The markets are slowly moving into the holiday season as the pace of economic reports starts to slow down from this coming week. In the eurozone, data is very quiet with only Germany’s PPI figures and Ifo business climate data followed by Italy’s retail sales coming out during the week. On Monday, the German Ifo business climate data will give a glimpse into business optimism for the month ahead which is expected to see a modest increase in December. Last week’s flash PMI’s from manufacturing and services showed a modest improvement, which could see the Ifo business climate rising from 110.4 previously.
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EURUSD Weekly Forex Forecast – 19th to 23rd Dec 2016 – Bullish