Technical Outlook: EURUSD rallied above 1.05200 resistance level and Friday’s price action shows prices dipping back to this level. The weekly chart shows a bullish follow through after the doji pattern from the week before which could indicate near term upside. EURUSD could remain range bound between 1.0520 and 1.0400 but price action looks convincing to the upside. Resistance at 1.0700 will be the next target to the upside. Look for near term declines to 1.0475 and if price posts a reversal here, we could expect further gains to 1.0700. In the event of a decline below 1.0475, EURUSD could once again enter a sideways holding pattern above 1.0400.
Fundamental Outlook: The euro was exhibiting some erratic behavior last week. On Monday the European markets are closed with the rest of the week focusing on the manufacturing and services PMI data. The week will also see the flash inflation estimates for December which point to the headline inflation likely to rise 1.0% in December. Germany will also be reporting inflation figures this week. Going by the strong increase in Spanish CPI last week, the bias is to the upside. The higher oil prices are likely to see the energy prices driving inflation higher across the board. Despite any short term boost to the euro, the single currency is likely to remain pressured amid a short trading week.
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EURUSD Weekly Forex Forecast – 2nd to 6th Jan 2017 – Bullish