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Meanwhile, the Fed's closely looking gauge of inflation rose 1.6% on annualized basis, while on a monthly basis core PCE Price Index inched higher 0.2%, meaning that consumers are buying goods and services, thus stimulating the economy. In October, consumer spending, which accounts for more than two-thirds of US economic output, rose 0.2% after being flat a month earlier, the Commerce Department said. Low gasoline prices as well as a firmer labour market are bolstering consumer spending, which should help to shield the economy from slowing growth in China and the Euro zone, as well as a recession in Japan.
Meanwhile, European Central Bank Vice President Vitor Constancio said that the central bank is set to purchase government bonds early next year should policy makers ponder that more decisive measures are needed. The ECB is already buying covered bonds and bundled loans known as asset-backed securities. The central bank aims to expand the size of its balance sheet to the levels of early 2012, meaning around 1 trillion euros higher than it is today. If the ECB purchases sovereign debt, using the capital key, it means German bunds would be the main target. Roughly 18% of any money spent would go on German Bunds, 14% on French bonds and 12% and 8% on Italian and Spanish paper, respectively. Nevertheless, the ECB's Governing Council is split on either the need for further stimulus or the design of purchases. Bundesbank President Jens Weidmann said on November 24 that there are "high legal hurdles" to buying government debt.
Market to be driven by EU fundamentals as US market closed due to Bank Holiday
Volatility of the EUR/USD currency pair will remain on rather high levels on Friday, mostly because of fundamental statistics from the shared currency area. The Eurostat is ready to publish some fresh data on the Eurozone's unemployment rate. Moreover, the attention will be focused on the inflation data, which is likely to show a decline to 0.3% on the annual basis.{ATTACHMENT}
EUR/USD to trade in narrow range
The long-term outlook for the EUR/USD cross remains bearish, as the cross has been moving downwards since the beginning of July. However, just recently the pair entered the triangle pattern on a daily chart with a narrow range of around 130 pips. From above the pair is capped by a long-term downtrend line, while support is provided by the 2014 low. All in all, we assume the pair to trade lower in the next few days, until the eventual break-out happens in the foreseeable future, which is likely to be to the south.Daily chart
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It seems that on the lower-time frame the single currency decided to rise in value this week. On Wednesday, the EUR/USD currency pair gained value for a third day in a row, as the single currency reached the weekly R1 at 1.2532. However, this level together with the long-term downtrend line stopped the pair's increase, and it was forced to give up the idea of breaching this level. It is worth pointing out that daily technical indicators changed from bearish to neutral, meaning that the Euro still has a chance to advance and cross the mentioned resistance.
Hourly chart
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