EUR/USD Pullback to 1.0750 after liquidity taken at 1.10

The EUR/USD exchange rate reached a peak of 1.1008 during the American session, touching the highest level since August, and then retraced, finding support above 1.0970. The pair remains close to 1.1000, benefiting from a broad-based weakening of the dollar as Treasury yields decline. The pair reached a peak of 1.0962 as the US dollar remains unattractive and bottomed at 1.0934 during European trading hours.

The US dollar has softened for the fourth consecutive day amid speculation that the Federal Reserve (Fed) has concluded the monetary tightening process and will commit to reversing significant rate hikes as early as May 2024. Meanwhile, the price on the daily timeframe has broken a significant swing high at the level of 1.0946 and continues to push higher. My personal view is to anticipate a possible descent in the coming hours as the market, after taking external liquidity, will return to fill the gaps left inside. Considering that the price was exiting an upward channel, I expect a rebound pullback on the upper side of the channel at the level of 1.0750-1.08, and then continue towards 1.12 in the long term, anticipating cuts in the second half of 2024.

Wish you all a good evening, greetings from Nicola.

Comment:

The EUR/USD continues its positive trend for the fifth consecutive session, trading around 1.1000 during the Asian session on Wednesday. This is attributed to the weaker US dollar, influenced by the less restrictive stance of the Federal Reserve. However, the dollar has recorded a decline for the fourth consecutive day, as there is speculation that the Fed may reverse the ongoing rate hikes as early as May 2024. Investors are awaiting important inflation data in both the United States and Europe.

Germany will release preliminary estimates of the Consumer Price Index for November, while the United States will disclose the Personal Consumption Expenditures (PCE) Price Index for October. Meanwhile, the GfK Consumer Confidence Survey in Germany has improved in December. In the United States, Consumer Confidence from CB for November is expected, along with remarks from Federal Reserve officials before the December monetary policy meeting. Attention is also focused on GDP data, with the possibility of manipulation during the London session and potential directionality during the distribution phase in New York.

Comment:

The EUR/USD exchange rate has decreased after four consecutive days of growth, currently holding slightly below 1.1000. Despite the retreat, the bias remains tilted to the upside, with the next resistance level at 1.1050. Despite a new three-month high at 1.1016, the EUR/USD retraced below 1.1000, despite risk appetite. Inflation in Europe has slowed down, while the U.S. economy shows stronger growth in the third quarter. Bond yields have decreased on both sides of the Atlantic. The U.S. economy expanded in the third quarter by 5.2%, supporting the dollar. Future data includes the core personal consumption expenditures price index and weekly initial unemployment claims in the United States, which could further influence the dollar. The structural bias in the short term remains short by Wednesday's close.