EUR/USD Starts the Week on the Defensive



The pair ended Friday with profits and managed to avert a losing week, as markets seemed to breathe a sigh of relief after the US Consumer Price Index data.

CPI Inflation rose 6.8% y/y in November, compared to October's 6.2% y/y, marking its highest level since 1982, while Core CPI increased 4.9% y/y form 4.6% y/y prior. The monthly figures though, offered some respite, as the eased to 0.8% m/m (from 0.9% prior) and 0.5% m/m (from 0.6% prior) respectively.

Today though, the US Dollar finds renewed momentum, leading EUR/USD to losses back below its EMA100. Things have not changed much from our previous analysis, since it remains vulnerable to last month's 2021 lows (1.1184) but it may still be early for a breach that can open the door towards 1.1099.

The common currency however, managed to close last week above 1.1300 and the aforementioned exponential moving average, while the Relative Strength Index (RSI) point towards oversold condition. As such a push above 1.1300 is likely, but a catalyst will be required for a recovery beyond the key 1.1350-80 region, which contains the descending trend-line from October's high and the 38.2% Fibonacci of the "October High/November Low" drop.

The economic calendar does feature any important economic releases today, but over the next days, there are many important events. Standing out, are the Fed's monetary policy decision on Wednesday, followed by the European Central Bank on Thursday - both with the potential create increased volatility.

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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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