Decoding Currency Shifts: EUR/USD Analysis Unveils Economic Trends on December 11, 2023
As we delve into the technical analysis of the EUR/USD pair for December 11, 2023, significant market shifts are underway. The EUR is on a downward trajectory, with key support levels shattered. We explore the factors steering this movement and their global implications.
Key Takeaways: EUR/USD Analysis (December 11, 2023)
- Euro Decline: EUR is on a downward trend with key support levels broken.
- ECB Speculations: European equities rise on expectations of ECB interest rate cuts, fueled by Germany's inflation slowdown.
- British Optimism: Bank of England's survey reveals British households foresee the lowest inflation rate in two years at 3.3%.
- US Job Market Resilience: US non-farm payrolls surged by 190,000 in November, easing concerns of a potential recession.
- Consumer Sentiment Rebound: US consumer sentiment rose by 13% in December, erasing declines from the previous four months.
- Global Economic Impact: Interconnected factors shape currency movements, from potential ECB decisions to a resilient US job market.
Euro Dynamics and ECB Expectations
European equities rise amid speculations of the ECB initiating interest rate cuts. Germany's inflation slowdown has played a pivotal role, evidenced by a 2.3% y.o.y. increase in consumer prices in November. However, month-on-month, prices dipped by 0.4%. Energy product costs have notably decreased, fostering optimism for an ECB rate cut and propelling the European stock market.
British Inflation and BoE Insights
The Bank of England's quarterly survey reveals a positive outlook among British households, projecting the lowest inflation rate in two years at 3.3%. This optimism is rooted in the aftermath of the Ukraine conflict, with fewer consumers anticipating a rise in interest rates. Only 44% of respondents foresee an increase, marking the largest decline since the Brexit referendum in 2016.
Surprising Strength in US Job Market
In the United States, non-farm payrolls surged by 190,000 in November, exceeding expectations. The healthcare and government sectors spearheaded job additions, contributing 77,000 and 49,000 jobs, respectively. The unemployment rate dropped to 3.7%, accompanied by a remarkable 0.4% increase in average hourly earnings. This unexpected robustness eases recession concerns but may extend the period of higher Fed rates.
US Consumer Sentiment Rebound
The University of Michigan's Surveys of Consumers reveal a remarkable 13% rise in consumer sentiment in the US for December. This surge erased declines from the preceding four months, driven by improved inflation expectations. Both short- and long-term business outlooks witnessed a boost of over 24%, surpassing all forecasts. This optimistic shift in household perspectives on inflation is the most significant in 22 years.
Technical Market Outlook:
The EUR/USD pair has encountered a bearish trajectory, breaching the crucial technical support at 1.0748. Despite a brief rebound from the local low of 1.0724, the bulls face headwinds. Momentum remains weak, signaling the potential for a continued downtrend. Let's dissect the technical indicators and pivotal levels shaping the market outlook.
Technical Support and Resistance:
- The breach of support at 1.0748 led to a local low at 1.0724.
- A short-lived bounce occurred but faltered around the 50-day Moving Average at 1.0780.
- The downside momentum persists, targeting key support levels at 1.0697 and 1.0675.
Weekly Pivot Points: Pivot Points serve as vital markers for trend reversals and support/resistance levels:
- WR3: 1.1033
- WR2: 1.0964
- WR1: 1.0862
- Weekly Pivot: 1.0764
- WS1: 1.0691
- WS2: 1.0622
- WS3: 1.0520
Trading Outlook:
- The EUR/USD pair faced a reversal from the 61% Fibonacci retracement at 1.0963, triggering a sharp -2.70% decline.
- A weekly close above this level is crucial for signaling a potential long-term trend reversal favoring the Euro.
- As the EUR/USD navigates a challenging landscape, traders should closely monitor key support levels and the pivotal 1.0780 mark. A breakthrough or rebound from these points could dictate the pair's near-term direction. Caution and strategic analysis are paramount in this dynamic market.
Intraday Indicator Analysis:
- 6 out of 22 technical indicators signal a Strong Sell, while 11 are Neutral, and 6 indicate a Buy.
- Moving averages present a split view with 10 showing a Strong Sell and 8 signaling a Buy.
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Important Reminder
The begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.
Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.
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