EUR/USD recovers above 1.24

Source: Dukascopy Bank SA
© Dukascopy Bank SA
{ATTACHMENT}On Monday the shared currency advanced 0.41% against the Greenback, while unexpectedly positive statistical data from Germany contributed to the Euro's increase versus all major currencies. Ifo Business Climate in Europe's largest economy went up to 104.7 points in November, even though analysts on aggregate predicted this indicator to deteriorate for a sixth consecutive month. At the same time, more important fundamental data is due to be released later this week, including revised Q3 GDP growth in the US, German retail sales and French consumer spending.

Being that US statistics continues to show further sings of improvements on all fronts, including economic growth, private consumption and manufacturing, the Federal Reserve has recently decided to end its major program of asset purchases. Lowering oil prices and strong consumer sentiment are adding more optimism about US economy in the foreseeable future. As a result, the American dollar is moderately rising against its major counterparts and this tendency is likely to take place for a prolonged period of time. Meanwhile, the Organization for Economic Cooperation and Development warned the Fed to delay any rate hikes, in case the US growth is undermined by stronger Dollar or volatility of financial markets.

Compared to the world's biggest economy, the Eurozone's economic perspectives do not look that positive. Economy is still failing to gain any considerable growth momentum, while inflation is hovering around its all-time lows. Even though Germany and France managed to avoid the recession in July-October quarter, growth in the currency bloc's countries is too uneven, creating a lot of risks inside the EU. Earlier last week, the ECB President Mario Draghi affirmed his commitment to raise inflation level in the Eurozone and said that it should be done as soon as possible. Economists from Barclays point out that Draghi's comments this time reflected growing concern that the CPI may fall even more.





Volatility to increase on Tuesday as more fundamentals to be released

Volatility among all USD pairs will be uplifted throughout Tuesday and is likely to be much stronger than in the first day of the week. US Prelim GDP statistics is due to be published along with consumer sentiment index from the Conference Board. The European data will give an inside to final GDP data in Germany and retail sales in Italy.
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EUR/USD hovers above 1.24

The long-term outlook for the EUR/USD cross remains bearish, as the cross has been moving downwards since the beginning of July. For the time being the pair is trading within the boundaries between 1.24 and 1.25. However, any negative impetus will push the cross down to 2014 lows around 1.2360. From another side the Euro is limited by a long-term down-trend around 1.2540; therefore, the bearish scenario is most probable.

Daily chart
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It seems that on the lower-time frame the single currency decided to rise in value this week. After a significant drop in the end of the previous week, the EUR/USD recovered some losses and surpassed the 1.24 major level. The pair managed to reach the weekly pivot point at 1.2444, but this level looks rather strong for pair's bulls to cross. On the other hand, from the south the Euro is underpinned by a monthly S1 at 1.2376.

Hourly chart
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SWFX sentiment remains unchanged with respect to the Euro

The advantage of the longs over the shorts has increased since the previous report—the share of the bulls advanced from 56 to 59%. In the meantime, the portion of the orders to sell the Pound also grew, but from 58 to 61%.
© Dukascopy Bank SA
© Dukascopy Bank SA
© Dukascopy Bank SA

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