Friday's U.S. employment data delivered mixed results, leading to dollar weakness. This weakness aligned with gains in the stock market (as previously anticipated). However, by the end of the day, investors decided to lock in short-term profits due to increased uncertainty surrounding the upcoming meetings of the Federal Reserve and the European Central Bank.
Mary Daly, President of the San Francisco Fed, unexpectedly stated that if inflation does not continue to decline, the Fed might raise rates. We interpret this as a signal of a potential rate hold on December 18 or a 0.25% rate cut accompanied by a pause announcement for January and March. Either outcome could favor the dollar.
Market sentiment regarding the ECB's monetary policy remains more pessimistic. Europe faces challenges like a potential trade war with Trump, deepening economic contraction, and internal political issues, including debt crises in Italy, Spain, and Greece. Consequently, even if the ECB cuts rates on December 12, the market response may be muted.
The euro remains within a range of uncertainty between 1.0461 and 1.0598. The upper boundary could extend to 1.0667, as the price needs to break above the daily balance line, which is capping upward movement.
The Marlin Oscillator has established itself in the growth zone. However, given Friday's profit-taking, the market may need time to accumulate positions before breaking above the 1.0598 resistance. Moving above this level would pave the way toward 1.0667 and reach the strategic target of 1.0762–1.0777.
Despite significant resistance at 1.0598, the euro retains its upward potential. A bearish shift would require a breakdown below the 1.0461 support level.
On the H4 chart, the Marlin Oscillator's signal line has reached zero-line support, suggesting a potential minor reversal and subsequent sideways movement under the 1.0598 resistance.
If the price attempts to breach 1.0461, the MACD at 1.0505 will get in its way, potentially leading to a false breakout. In conclusion, the euro continues to drift freely within the 1.0461–1.0598 range, awaiting a decisive move.
