A Weaker EURO Could Send FIBER Towards 1.09000 Level !
Have a look at the main weekly TF chart which shows the price of EURUSD confined in a long term held and respected wedge! The blue horizontal lines are the nearby support and resistance levels taken from the monthly TF. Several months ago this pair formed a bearish H & S pattern on the weekly chart which was broken as the price started to accelerate downwards partly due the FED being hawkish as they raised the Interest rates this making the USD more stronger against the basket of major currencies.
When the price broke the neckline of the pattern where also the main support now turned resistance was present (1.14500), the price should technically HIT 1.09000 where the next concrete support is present. However many months have passed by the price is typically rangebound with 1.145000 level now turned into a concrete resistance.
At the moment most of the major central banks have started to ease their monetary policy, most notably the FED as a 25BP rate cut is already priced into the market which would likely take place at the end of this month. With the trade war effects already visible across the world it has certainly sent fears of an impending US recession as the yield curve stays inverted. Therefore the markets are largely expecting the FED to ease further in 2020 too.
So all this theoretically should make the EURUSD spike higher but practically there has been little impact from the BULLS. While other currencies such as the SAFE HAVEN pairs (USDCHF, USDJPY) have all taken the HIT and talk about GOLD which has broken multi year records. THEREFORE THE MAIN QUESTION REMAINS: WHY IS THE EURUSD SO RESISTANT AND STRUGGLING TO CLIMB FURTHER BEYOND THE PSYCHOLOGICAL LEVEL OF 1.15?
The answer to this question is not so complicated but the consequences are certainly bad for the EURUSD! First of all USD is still the world's reserve currency and the demand for it wont fade that easily. To add to this for many, the USD is a SAFEHAVEN compared to the EUR. Furthermore, if the FED eases their monetary policy their interest rate differentials will still be higher compared to the EUR which inturn would make the demand for the greenback stronger. Thirdly, the EUROZONE economy is not doing so well for the past months as most of the fundamental data as below the expectations
As the ECB president mario draghi term comes to an end, the new to be appointed former president of the IMF could change the course of this pair in the coming year. But as for now i feel this pair would likely HIT 1.0900 which is a concrete support and after that it might rise further depending on the economic and monetary outlook in the EUROZONE and The U.S.
When the price broke the neckline of the pattern where also the main support now turned resistance was present (1.14500), the price should technically HIT 1.09000 where the next concrete support is present. However many months have passed by the price is typically rangebound with 1.145000 level now turned into a concrete resistance.
At the moment most of the major central banks have started to ease their monetary policy, most notably the FED as a 25BP rate cut is already priced into the market which would likely take place at the end of this month. With the trade war effects already visible across the world it has certainly sent fears of an impending US recession as the yield curve stays inverted. Therefore the markets are largely expecting the FED to ease further in 2020 too.
So all this theoretically should make the EURUSD spike higher but practically there has been little impact from the BULLS. While other currencies such as the SAFE HAVEN pairs (USDCHF, USDJPY) have all taken the HIT and talk about GOLD which has broken multi year records. THEREFORE THE MAIN QUESTION REMAINS: WHY IS THE EURUSD SO RESISTANT AND STRUGGLING TO CLIMB FURTHER BEYOND THE PSYCHOLOGICAL LEVEL OF 1.15?
The answer to this question is not so complicated but the consequences are certainly bad for the EURUSD! First of all USD is still the world's reserve currency and the demand for it wont fade that easily. To add to this for many, the USD is a SAFEHAVEN compared to the EUR. Furthermore, if the FED eases their monetary policy their interest rate differentials will still be higher compared to the EUR which inturn would make the demand for the greenback stronger. Thirdly, the EUROZONE economy is not doing so well for the past months as most of the fundamental data as below the expectations
As the ECB president mario draghi term comes to an end, the new to be appointed former president of the IMF could change the course of this pair in the coming year. But as for now i feel this pair would likely HIT 1.0900 which is a concrete support and after that it might rise further depending on the economic and monetary outlook in the EUROZONE and The U.S.
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