EUR/USD is now on week 7 of a small range that's built after a major spot of support came into play. The support emanates from two Fibonacci levels, one at 1187 and the other at 1212. The latter of those prices is the 61.8% retracement of the 'lifetime move' in EUR/USD.
The pair came crashing into this zone ahead of the Thanksgiving holidays and that's what had helped to propel USD to fresh yearly highs. But the day after Thanksgiving, Black Friday, is when Omicron came into the equation and USD put in a strong drop as EUR/USD shorts began to cover.
While many other markets soon started to shrug off that Omicron risk, the US Dollar and, in-turn, EUR/USD have both remained range-bound ever since. And that held through the December FOMC rate decision in which the bank opened the door to a possible 3 hikes in 2022.
In EUR/USD, that range is only getting tighter and tighter. It's now looking like the pair may first need to pull back to clear out some stops before the longer-term bearish trend is ready for resumption.
Short-term, an ascending triangle has formed with horizontal resistance around 1.1374 and an ascending trendline helping to set support. This is a topside breakout formation, and above price action is a zone of prior support running from 1.1448-1.1500. A bullish breakout to this zone could then possibly re-open the door for shorts, depending on how price action comes in.
Notably U.S. inflation is on the calendar for next Wednesday and this could be an opportune time for traders to position around both USD and EUR/USD.
The pair came crashing into this zone ahead of the Thanksgiving holidays and that's what had helped to propel USD to fresh yearly highs. But the day after Thanksgiving, Black Friday, is when Omicron came into the equation and USD put in a strong drop as EUR/USD shorts began to cover.
While many other markets soon started to shrug off that Omicron risk, the US Dollar and, in-turn, EUR/USD have both remained range-bound ever since. And that held through the December FOMC rate decision in which the bank opened the door to a possible 3 hikes in 2022.
In EUR/USD, that range is only getting tighter and tighter. It's now looking like the pair may first need to pull back to clear out some stops before the longer-term bearish trend is ready for resumption.
Short-term, an ascending triangle has formed with horizontal resistance around 1.1374 and an ascending trendline helping to set support. This is a topside breakout formation, and above price action is a zone of prior support running from 1.1448-1.1500. A bullish breakout to this zone could then possibly re-open the door for shorts, depending on how price action comes in.
Notably U.S. inflation is on the calendar for next Wednesday and this could be an opportune time for traders to position around both USD and EUR/USD.
