December 27, 2023 – The EUR/USD pair exhibited a notable uptrend on Tuesday post the Christmas holiday, extending gains into early Wednesday and reaching its highest level since August, hovering near 1.1050. The trading week saw the Euro (EUR) making significant strides against major currencies, with particular strength observed against the Japanese Yen.
Amidst thin trading conditions expected for the remainder of the week, the near-term direction for EUR/USD remains challenging to determine. However, the US Dollar (USD) faces difficulties in finding demand following substantial losses against major rivals the previous week. The pair is anticipated to maintain its stability if risk flows dominate financial markets in the coming days.
At the time of reporting, US stock index futures showed minimal changes for the day, contributing to the overall stability in the market.
Upcoming Economic Calendar:
The US economic calendar for the week features the Richmond Fed Manufacturing Index for December and the weekly MBA Mortgage Applications. Market participants anticipate limited market reaction unless unexpected developments emerge from these data releases.
Technical Analysis:
EUR/USD continues to reside within the upper-half of the long-term ascending regression trend channel. The Relative Strength Index (RSI) indicator on the 4-hour chart remains above 60, reinforcing the bullish bias. However, a cautionary note is sounded by the RSI-price divergence on the same chart, indicating a potential loss of bullish momentum and hinting at a corrective phase before the next upward move.
Key Technical Levels:
Support Levels: 1.1000 (psychological level, mid-point of the ascending channel), 1.0970 (50-period Simple Moving Average), 1.0930 (static level).
Resistance Levels: 1.1050 (static level), 1.1100 (psychological level, static level), 1.1160 (upper limit of the ascending channel).
Traders and investors are advised to monitor these levels closely for potential shifts in market dynamics and to stay informed about ongoing developments in the EUR/USD pair.
