Euro Keeps Moving Higher, Bulls in Charge of the Market
Morning Brief:
- European indices open higher
- Retail sales in Spain, unemployment claims in the USA
- US crude oil and natural gas inventory reports scheduled
Futures contracts on European indices indicate a slightly higher opening of today's cash session on the Old Continent. This comes after Wall Street posted modest gains yesterday, with Asia-Pacific indexes rising in today's session. JPY is the best performing major currency while USD lags behind.
Bank of Japan Governor Ueda said the chances of exiting negative rates in 2024 are 'non-zero'. Nevertheless, Ueda also stressed that he was in no hurry to change the BOJ's ultra-loose policy.
Japanese industrial production fell in November by 0.9% m/m (approx. -1.5% m/m). On an annual basis, production was 1.4% y/y lower. Japanese retail sales increased by 5.3% y/y in November (est. 5.0% y/y)
The economic calendar for today is limited, but contains some interesting publications. The EUR may see some movement when the Spanish retail sales reading is released. However, things will get more interesting this afternoon with the release of US unemployment claims and trade balance reports. Investors from the energy sector will focus on data on crude oil and natural gas inventories in the United States.
9:00 - Spain, retail sales for November. Expectations: 3.9% y/y. Previous: 5.0% y/y
14:30 - USA, data on the number of new unemployed.
- Number of new unemployed: Expectations: 211 thousand Previous: 205 thousand
- Continued Claims: Expectations: 1,875 thousand Previous: 1,865 thousand
14:30 - USA, trade balance for November. Expected: -$88.4 billion. Previous: -$89.6 billion
16:00 - USA, pending house sales for November. Expected: 1.0% m/m. Previous: -1.5% m/m
16:30 - EIA report on natural gas storage. Expected: -80 bcf. Previous: -87 bcf
17:00 - DOE report on US crude oil stocks.
- Oil Stocks: Expectations: -2.5 mb (API: +1.84 mb)
- Gasoline Stocks: Expected: +0.2 mb
- Distillate Stocks: Expected: +0.6 mb
Technical Market Outlook:
The Cup and Handle pattern on the H4 time frame chart has been completed, so the EUR/USD pair has made a breakout above the technical resistance level and made a new swing high at the level of 1.1126. The projected target for the Cup and Handle price pattern is located at the level of 1.1310 measured from the last swing high located at 1.1018, so the overall advance might be even 2.66%. The nearest target for bulls is however located at the level of 1.1150, so it needs to be broken first.
The intraday technical support is seen at the level of 1.1063.The strong and positive momentum indicates the bulls are still in charge of the market, so it supports the short-term bullish outlook. Nevertheless, there is a clear Bearish Divergence on the H4 time frame chart between the price and momentum indicator, so the correction is expected soon.
Weekly Pivot Points:
Pivot Points are key price levels used in technical analysis to identify potential trend reversals, support, and resistance levels in financial markets.
WR3 - 1.11323
WR2 - 1.10820
WR1 - 1.10650
Weekly Pivot - 1.10317
WS1 - 1.10147
WS2 - 1.09814
WS3 - 1.09311
Trading Outlook:
On the weekly time frame chart the EUR/USD pair broken above the old 61% Fibonacci retracement positioned at 1.0963, so now this level is incvalidated. To confirm the up move a weekly close above this level is needed. The breakout would serve as the initial signal for a potential long-term trend reversal in favor of the Euro. The key technical support is seen at the level of 1.0666.
EUR/USD H1 Indicator Analysis:
- 7 out of 22 technical indicators are showing Buy signal, 8 indicators are Neutral and 7 shows a Sell signal
- 18 out of 18 moving averages are showing Buy signal
Sentiment Scoreboard:
The general sentiment on the scoreboard is bullish (59% vs.41% bears). Last week sentiment remains bullish as well (60%bulls vs.40% bears) while the last three days sentiment is bullish as well (62% bulls vs.38% bears).
Useful Links:
Important Reminder:
The begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.
Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.
