- FOMC minutes enhance USD.
- German CPI beats estimates.
- Central bank divergence stays.
- Technical sample may result in additional EUR/USD draw back.
EURO FUNDAMENTAL BACKDROP
- Fast charge hikes
- Discount in bloated steadiness sheet
- Omicron indifference
EUR/USD ECONOMIC CALENDAR
German CPI (see calendar beneath) hit 5.3% for the December interval beating each forecasts as properly is the earlier print. Preliminary reactions have been barely bullish however comparatively muted due to the well-articulated steerage on charge hikes and tapering by the ECB in December 2021.
Later right this moment the ISM Non-Manufacturing PMI (DEC) launch is due and will maintain extra important insights into the U.S. economic system than the smaller manufacturing sector. Companies holds extra sway over the U.S. dollar and particularly, employment and value metrics (inflation).
Tomorrow’s NFP information ought to result in some foreign money volatility pre and post-announcement and should end in important value fluctuation ought to the print comply with within the footsteps of yesterday’s ADP numbers – though the connection between the 2 is tenuous at finest.
Supply: DailyFX Economic Calendar
EUR/USD TECHNICAL ANALYSIS
EUR/USD DAILY CHART
Chart ready by Warren Venketas, IG
Technically, every day EUR/USD price action displays a consolidatory sample since later November 2021. The sample resembles that of a rising wedge or bear flag; historically bearish continuation patterns. Ought to costs break beneath wedge/flag help (yellow), this can open up additional draw back in the direction of subsequent help ranges.
- Wedge/flag help
- 1.1186 (November swing low)
IG CLIENT SENTIMENT DATA POINTS TO SHORT-TERM UPSIDE
IGCS exhibits retail merchants are at the moment distinctly lengthy on EUR/USD, with 59% of merchants at the moment holding lengthy positions (as of this writing). At DailyFX we sometimes take a contrarian view to crowd sentiment and the very fact merchants are net-long is suggestive of a bearish inclination nonetheless, the latest internet adjustments in longs and shorts level to a bullish bias.
Contact and comply with Warren on Twitter: @WVenketas