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EUR/USD Daily Forecast – Euro Recovers to Erase Weekly Loss

Jignesh Davda

Volatility to Slow for Remainder of Week

With the Thanksgiving holiday, it is like the markets will see a further slowing of volatility in the second half of the week. I suspect intraday traders will continue to fade extreme moves and that the pair will look to close the week out not too far from where it trades now.

Buyers stepped in yesterday just ahead of the current November low of 1.0989. This prevented stops being triggered as it is quite likely that some have accumulated below the low.

US data releases from yesterday were mixed. GDP growth came in slightly ahead of the analyst estimate for last quarter and durable goods orders rose unexpectedly in October. However, the Chicago PMI, home sales and the PCE index all fell short of expectations.

Of note is the core PCE reading for October which showed a rise of 0.1%. It was the fourth consecutive month that the figure fell short. The last time it beat expectations was a year ago. This suggests inflationary pressures remain and does not bode well for the Federal Reserve.

Another factor impacting the Federal Reserve is a somewhat negative development in the US-China trade war. Yesterday, President Donald Trump signed a bill supporting protesters in Hong Kong. China was not pleased and commented that the US was unnecessarily interfering in domestic matters.

This has resulted in a bit of risk-off in the markets with most of the indices paring gains while precious metals are seeing a very small lift.

Technical Analysis

As mentioned, I’m not expecting much from EUR/USD over the next two days as volatility typically slows in holiday trading. Keep in mind, EUR/USD volatility has already slowed a great deal over the past few weeks.

EURUSD 4-Hour Chart

The pair is currently facing resistance from a horizontal level at 1.1016. There’s further resistance just above it.

EURUSD Daily Chart

Earlier in the week, the pair fell in a range with rallies capped around 1.1025. I suspect the pair might make an attempt to trigger some stops above that level. I have little reason to believe it will rally beyond that at this point.

Bottom Line

  • EUR/USD is showing upward momentum in the early day. However, follow-through appears unlikely considering that volatility typically slows around Thanksgiving.
  • EUR/USD might try and trigger stops above the early week high around 1.1025. After that, a range appears likely.

This article was originally posted on FX Empire