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EUR/USD loses 1.1100 and falls on the way to the Christmas holidays. Why?

EUR/USD loses 1.1100 and falls on the way to the Christmas holidays. Why?

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The EUR/USD weakens in the last trading session of the week and loses the psychological threshold of 1.1100, in a context of lower liquidity in the markets on the way to Christmas holidays and the end of the year.

At the time of this writing, the pair moves back 0.33% and touches 1.1085, its lowest level since December 11, struck by fears of a slowdown in the euro zone and the good performance of the US economy. 

On this last point, it is necessary to highlight that the GDP of the United States grew at an annualized rate of 2.1% in the third quarter of 2019 according to the third review published this morning, a sign that the US economy remains dynamic.

For next week, EUR/USD movements may be smaller, as many institutional investors have closed the “beach bar” facing the final stretch of the year. With a lower trading volume, volatility would be relatively limited, as long as there are no disturbing headlines for the markets.

EUR/USD TECHNICAL ANALYSIS

A few days ago we talked about the importance of the 200-day moving average (SMA-200) for the EUR/USD and how this lagged indicator had acted as a strong resistance against advances since the beginning of the year.

History has repeated itself in recent days and the price has been rejected once again by the SMA-200.

In this context, it would not be surprising to observe a fall to support at 1.1038, considering that the bias of the short-term pair remains bearish.

A break of this level would exacerbate the declines and put into play the 1.1000 (Fibonacci retracement of 61.8% of the progress from October to December of this year).

TECHNICAL GRAPH OF EUR/USD

EURUSD technical chart

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