The EUR/USD is little changed for a third consecutive week, trading around the 1.1300 figure, as uncertainty related to the Omicron coronavirus variant and looming central bank decisions kept market participants in a cautious mood. At this point, speculative interest has priced in that the US Federal Reserve will likely announce a  doubling of its bond-buying program tapering. The Fed decided in November that the economy was strong enough to trim financial support, particularly as inflationary pressures remain high. The central bank announced it would reduce the pace by $15 billion a month, $10 billion in Treasuries and $5 billion in mortgage-backed securities.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

The EUR/USD pair set a lower low on a weekly basis but held above the yearly low at 1.1185. The overall technical picture indicates that further declines are likely, considering central bank imbalances. A strong static support level is the 1.1160 price zone, a probable bearish target as long as the pair remains below the 38.2% retracement of its November slide at 1.1380. A break below it exposes the 1.1000 psychological threshold, a level that could be reached before year-end.

The weekly chart shows that EUR/USD remains well below all of its moving averages, and the 20 SMA crossing below the 100 SMA, is a sign of prevalent selling interest. The Momentum indicator is maintaining its bearish slope well into negative levels as the RSI indicator consolidates in oversold territory.

The case for a bearish extension is not that clear in the daily chart, as higher daily openings maintain the Momentum indicator is heading north above its midline. Given that the pair cannot sustain intraday gains, however, chances tilt in favour of further downside. In the aforementioned chart, the RSI indicator has turned lower, currently at around 41, as the pair struggles with a firmly bearish 20 SMA, adding to the bearish case.

Should the pair rally past 1.1380, the next relevant resistance level comes in at 1.1470, a long term static resistance area.

EURUSD Being Optimistic Above 1.1300

Dec 11 2021

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