It was expected by our analysts that the USD would decline, as the Trump government would not care about inflation and stimulate the markets. However, it appears that the strengthening and potential gains in the USA are creating demand for the USD, as investment is coming in from the rest of the world. This demand outweighs upcoming stimulus.
Economic Calendar Analysis
This week, markets will watch the publication of the US Consumer Price Index on Wednesday at 13:30 GMT. The inflation data will reveal whether the US government and the central bank can continue to stimulate the economy.
However, the markets already expect annual inflation to have increased from 2.4% up to 2.6%.
On Thursday, inflation at the wholesale level will be revealed. At 13:30 GMT, the Producer Price Index data sets will be published.
Lastly, on Friday, at 13:30 GMT, the US Retail Sales data release might impact the markets via the US Dollar.
EUR/USD hourly chart analysis
This week, the rate was heading to the 1.0600 mark, but could first find support in the weekly S1 simple pivot point at 1.0621. Further below, the 1.0550 level and the weekly S2 at 1.0525 might act as support, before the 1.0500 mark would be reached.Meanwhile, note that a potential recovery of the Euro against the USD is expected to face resistance in the 1.0700 mark and the descending 50 and 100-hour simple moving averages. Higher above, take into account the weekly simple pivot point at 1.0779 and the range near 1.0760.
Hourly Chart
EUR/USD daily chart's review
On the daily candle chart, the rate is piercing through the 1.0635/1.0700 range. If this range holds, despite the fundamental background, the rate could return to the 200-day SMA and the 1.0900 mark.Daily chart
Read More: Technical Analysis
Traders are still long
Before the US elections, traders were 58% in bullish positions. Traders were expecting a recovery of the pair.
Meanwhile, trader pending orders in the 100-pip range around the rate were set to sell. Namely, 67% of orders in that range were sell orders.
By this week, traders had added to the long positions, as 68% of volume was in long positions.
In the meantime, pending orders were neutral, as just 51% of pending orders were to buy.