EUR/USD Holiday Indecision

EUR/USD - H4

The last week of the year started on the front foot, but the Eurodollar faces headwinds today, amidst lack of catalyst and holiday thinned trading.

Although it has staged a recovery, following November's 2021 lows, progress has been slow and limited, with the pair heading towards a somewhat mixed month and a negative year.

Central bank differential works against it, as the Fed announced faster tapering earlier in the month and its members see three hikes in 2022, while the ECB reluctantly moved towards a reduction in asset purchases from March of next year.

On the technical front, EUR/USD remains capped by the EMA200 and vulnerable to selling pressures towards mid-1.1200s and the ascending trend-line from that low. However, a catalyst will likely be needed for a breach and larger drop that will threaten 1.1184.

On the other hand, the week started in an upbeat mood and the RSI stays above 50, giving the common currency the ability to push higher and towards the 38.2% Fibonacci of the November High/Low decline (1.1380). Despite that, the upside seems well protected and it does inspire confidence for bigger correction towards the descending trending from September's high (mid-1.1400s).

There are no major economic releases today, while the holiday season warrants caution around liquidity/volatility conditions.


Past Performance: Past Performance is not an indicator of future results.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

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