Weekly Forex Analysis
(December 02 - December 06, 2019)
Hey! This is Philip with our new weekly outlook of the Forex market.
Below I present a preview of the article. To read the full analysis just click the big blue button.
US Dollar Fundamental Outlook – Expect Volatility To Expand This Week On Busy US Calendar
The last week was a dull one for Fx traders as most pairs moved only by a fraction of their usual trading ranges. But, that is likely to change this week, saying no more - it is a Non-Farm Payrolls week.
Aside from the NFP and other jobs data on Friday, the closely watched ISM manufacturing and services PMI surveys will be released on Monday and Wednesday. Volatility usually picks up when these 3 reports are released and, more often than not, trends in the Dollar are established that can extend for the next few weeks.
GDP data was released over the past week, which was stronger than expectations. The other data pieces, although slightly lower, were also near the forecasts. The US Dollar unsurprisingly stayed firm and could extend the gains if this week’s data is also solid or surpasses the consensus estimates.
The US-China trade talks remain a potential risk for currencies, and therefore, something to keep an eye on (read more about it in the Japanese Yen outlook below).
Euro Fundamental Outlook – German Politics An Additional Risk To EUR
The Euro didn’t move much either over the past week. The common currency should remain largely on the weak side, in line with the outlook for the broad Eurozone economy.
German politics are posing an additional risk for the Euro currency as the grand-coalition is at a test at the Social Democratic Party (SPD) conference at the end of this week. If the coalition breaks down, political uncertainty in Germany would increase, which can further complicate the outlook for the Euro.
The calendar doesn’t feature any high-impact reports. The final manufacturing and services PMIs will be released from EU countries throughout the week. Retail sales, the revised GDP, and German industrial production will be published at the end of the week.
EURUSD Technical Outlook:
EURUSD did proceed lower last week, but the 1.10 support was too strong for the bears, and the pair bounced there.
It’s important to note that volatility on EURUSD is at historic all-time lows. For example, the trading range of the whole past week was only around 50 pips. Thus, when looking for patterns or signals to trade, it’s important to bear this in mind as the significance of any patters or signals is lower when they occur on very low volatility.
The overall technicals remain largely unchanged. The support at 1.10 is now confirmed, while resistance is found at 1.11. Based on the weekly downtrend channel, the stronger (weekly) resistance is in the 1.12 area, while the more significant support is in the 1.0850 area.
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