The EUR/USD is still established around levels supporting upward directions. The 1.1875 resistance level, around which the pair is established, will support more power to move towards stronger resistance at 1.1920 and the psychologically important peak at 1.2000. At the end of last week’s trading, the pair tested the support at 1.1816 level, influenced by the victory of the pro-independence parties in the latest elections in Catalonia, which brought back the political fears inside the Eurozone, after a calm pace in, Germany, with Merkel closer to forming a coalition government. Despite the passage of the US tax cut bill, long awaited since Trump was elected, the dollar is under bearish pressure and the US stock markets retreated against expectations. It seems that the markets want to digest the content of this law and its effect on the current American economic growth. Last week, there was an announcement showing a retreat in the American economic growth number, as opposed to expectations, as well as an increase in the unemployment claims. The only positivity was from Philly Manufacturing Index and the New House sales data.
The EUR/USD will continue to be affected by the US Federal Bank, with a hawkish policy including more steps to raise the US interest rates, the last of which could be this week, which will be the third raise this year, and with expectations of another three raises next year. US inflation rates which are lower than the Fed’s target will also affect the EUR/USD as well as the monetary policy of the European Central Bank, with worries of low inflation rates that have not reached 2%, the ECB’s inflation target. The US Job data at the end of last week’s trading, showed strength, but there is still fear around the average wage growth in the country, even with employment reaching the lowest levels for 17 years. Overall, the greenback’s momentum increased by the interest rate rise and the US tax cut bill.
Technically: the EUR/USD is at a neutral zone with bullish bias which will gain strength if the pair settled above the 1.19 top, which supports the move towards stronger peaks at 1.2050 and 1.1966. On the bearish side, the nearest support levels are 1.1830, 1.1750 and 1.1640, the latest is a confirmation of the downward trend. In light of market closure due to holidays this week and early next week for Christmas and New Year's, traders need to be alert of price gaps due to markets coming back in interrupted form sometimes, and it is better to avoid trading until the markets are fully back to normal.
On the economic data front: Economic agenda is free today of any important data from the Eurozone.F rom the US, there will be an announcement of the consumer confident and pending house sales data.