EURUSD Technical Analysis

December 5, 2023 8:54 am


  • The Fed left interest rates unchanged as
    expected at the last meeting with basically no change to the statement.
  • Fed Chair Powell stressed
    once again that they are proceeding carefully as the full effects of policy
    tightening have yet to be felt.
  • The US Core PCE last
    week came in line with forecasts with the disinflationary progress continuing
  • The labour market is starting to show weakness as Continuing Claims are now
    rising at a fast pace and the recent NFP report
    missed across the board.
  • The ISM Manufacturing

    last week missed expectations falling further into contraction.
  • The recent US Consumer
    report beat expectations although the
    details about the labour market continued to weaken.
  • The hawkish Fed members recently shifted
    their stance to a more neutral position.
  • The market expects the Fed to start cutting rates
    as soon as Q1 2024.


  • The ECB left interest rates unchanged as
    expected at the last meeting as the central bank has ended its tightening cycle.
  • President Lagarde highlighted
    the weakness in the Eurozone economy and reaffirmed that rates will make a
    substantial contribution to curbing inflation.
  • The Eurozone CPI last
    week missed expectations across the board further reaffirming that the ECB is
    done for the cycle with rate cuts likely coming soon.
  • The labour market remains historically
    tight with the unemployment rate hovering at cycle lows.
  • The recent Eurozone PMIs slightly
    beat expectations on both the Manufacturing and Services measures although the
    indexes remain in contraction.
  • The ECB members continue to repeat that they will
    keep rates high for as long as necessary to bring inflation back to their 2%
  • The market expects the ECB to start cutting rates in
    Q2 2024.

EURUSD Technical Analysis –
Daily Timeframe


On the daily chart, we can see that EURUSD probed
above the key resistance around
the 1.0950 but sold off after touching the 1.10 handle. We got a nice pullback
as the price bounced around the 1.08 handle where we can also find the red 21 moving average for confluence. This is
where the buyers might start to pile in to position for another rally into new
highs, while the sellers are likely to continue to increase the bearish bets at
every break lower.

EURUSD Technical Analysis –
4 hour Timeframe

EURUSD 4 hour

On the 4 hour chart, we can see that we had a
strong divergence with the
MACD right into
the key resistance. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. The target is generally the base of the
divergent formation, which in this case comes right around the 38.2% Fibonacci retracement level.
This is where the buyers should step in with a defined risk below the level to
position for a rally into new highs. The sellers, on the other hand, will want
to see the price breaking lower to increase the bearish bets into the next
swing low at 1.0650.

EURUSD Technical Analysis –
1 hour Timeframe

EURUSD 1 hour

On the 1 hour chart, we can see that we
have another divergence with the MACD right at the 38.2% Fibonacci retracement
level. This is another bullish confluence for the buyers as it signals that the
bearish momentum is weakening and we might reverse from here. More conservative
buyers might want to wait for a break above the minor trendline before
entering the market, while the sellers should lean on the trendline to position
for a break below the recent low.

Upcoming Events

This week we will see lots of US labour
market data culminating with the NFP release on Friday. Today, we have the ISM
Services PMI and the US Job Openings reports. Tomorrow, we will get the US ADP
data. On Thursday, it will be the time for the US Jobless Claims figures, while
on Friday we conclude the week with the NFP report.

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