After the events, the surge continued until the EUR/USD reached one of the resistance ranges that we had marked at the start of the week. Namely, the November high level range at 1.1008/1.1017 has held and pushed the rate below 1.1000. Immediately afterwards, the 1.1000 acted as resistance and the 1.0980 level as support.
The rate consolidated, before declining on Friday morning due to the release of the lower than expected European country Markit Institute Purchasing Managers Index survey results. The surveys revealed that the EU firms are even more pessimistic about the future than previously expected. During the event, the support of the weekly R2 simple pivot point and the However, after the 1.0960/1.0965 were ignored.
The future outlook now depends whether the central bank policy momentum remains stronger than the PMI release caused decline. The Euro could move against the US Dollar either upwards or downwards.
Economic Calendar Analysis
During the week before Christmas, there will be a couple of data releases that could impact the financial markets.
On Thursday, not the publication of the US Final GDP at 13:30 GMT. This is the final of the three quarterly US GDP releases. The United States release quarterly Gross Domestic Data over a span of a quarter. Data is published in three releases – Advance, Preliminary and Final. The most impact comes from the Advance GDP, and the least is from the upcoming Final GDP.
On Friday, the United States Bureau of Economic Analysis will publish the Core Personal Consumption Expenditure Price Index at 13:30 GMT. The change of the index shows how inflation impacts consumers. It is different from the CPI with the fact that it measures only goods that are consumed by individuals.
EUR/USD hourly chart analysis
A resumption of the surge is set to face the 1.1000 mark, the 1.1008/1.1017 November and December high level range. Above these levels, note that the weekly R3 could act as resistance at 1.1033.On the other hand, a decline of the Euro against the USD could look for support in the 50-hour simple moving average near 1.0915 and the 1.0900 mark. Below these levels it is highly likely that the 1.0880/1.0888 range comes back into action. Below the range, note the weekly R1 simple pivot point at 1.0862 and the 100-hour simple moving average near 1.0847.
Hourly Chart
EUR/USD daily chart's review
On the daily candle chart, as written previously, the pair has reached the first target of the breaking out from the squeeze between the daily simple moving averages. See the previously written analysis: "This break out to the upside could aim at the 1.1000 mark. Higher above, note the high level zones near 1.1100 and 1.1250."However, if the move gets overextended and a decline starts, it could look for support in the daily moving averages. First in the 200-day SMA near 1.0820 and afterwards the 50 and 100-day SMAs near 1.0750 and 1.0720.
In the meantime, we have spotted that the recent surge has confirmed the existence of a channel up pattern that captures the pair's surge since early October. The pattern is confirmed, as both resistance and support lines have two reference points.
Daily chart
Read More: Technical Analysis
Traders go short
From Monday up to just before the Fed release, the Swiss Foreign Exchange traders were 52% in long positions.
Meanwhile, trader set up pending orders in a 100-point range around the current rate were 51%-59% to sell the Euro against the US Dollar.
After the release, traders were 52% short. Meanwhile, orders 59% to sell.
It appears that a minority has taken profits from the surge, which has moved the neutral sentiment to be slightly short. In the meantime, traders have set up sell orders to benefit from a possible retracement.
On Friday, traders were 60% short and orders were 56% to buy. Cleary, Dukascopy traders expect the bounce off from 1.1000 to extend, but have close by stop losses.