Today we would take a look at the EUR/USD currency pair. This instrument has mostly been dominated by economic reports and news from the European Union and the United States. While we saw the euro rally in November and recover some of its lost positions, the vote in favor of tax reform in the US helped solidify the positions of the dollar, and in December we have been observing a bearishness in this pair.
The euro itself is still doing well, nothing has changed in that respect. Economic data from around the eurozone continues to come in positive. Today we expect the European Central Bank to release its projections on economic growth and inflation within the eurozone, which are forecasted to be positive. If the results meet analysts’ expectation, then this will be a confirmation of an even stronger euro which may again rally against the dollar.
On the other hand, in the United States right now perhaps the most important piece of news is whether the Federal Reserve decides to increase interest rates once again. The December rate hike has been expected for months now and the probability of it finally happening is very high at 98%. Further monetary policy tightening could support the dollar. However, unlike the euro, the dollar is susceptible to political problems, such as the remaining complications with tax reform and the ongoing investigation into Russia’s involvement in Trump’s election as president.
In terms of the daily chart, today our daily pivot is located at 1.1784. The pair is currently trading below it, so watch out for the nearby support levels at 1.1756 and 1.1736. On the other hand, news from the ECB is likely to support the euro, so we may see the pivot breached, in which case you should look towards the resistance levels at 1.1804 and 1.1832.
