Technically speaking, the monthly chart, eurusd is working an ABCD (impulsive) and the completion of this pattern is "D point" (around 0.9250) with a "call" to 161.8%. Unlike the leg "AB", the leg "CD" was much steeper and faster until the first extension. From March to October 2015, however, we have witnessed a phase of laterality with the formation of a "Bearish Flag" confirmed in November 2015 with the breakout and also confirmed by re-testing during the month of December (see the chart "CRITICAL STRUCTURAL AREA"). All these items are in favor of a potential continuation of the bearish long-term trend. As we have already said, the first week of the year should not be considered "trusted" from the point of view of technical analysis (absence of operators on the market), while we should focus on the next two weeks, when we could see the placement of institutionals traders.
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TRADING RANGE MONTHLY LEVELS: (Click and Play)
FUNDAMENTAL ANALYSIS ========================== 2015 saw eurusd down 1.20 at 1.0450 thanks to, and perhaps even the rhetoric of ECB President "Super Mario" (Mario Draghi) and expectations of a change in the FED's monetary policy. But for 2016 we could see some important unknowns. Many analysts continue to defend monetary policy divergence between the two banks (FED and ECB) that will take eurusd to equal. If we look at our analysis on the monthly time frames, it would seem that we too have the same view. But this is not quite correct. If we look at the "Fundamentals" we must consider a few "logical aspects":
- The difference of monetary policy should push investors during the 2016 to ease US equity positions (look at SP500) and increase European equity positions (look at EURSTOXX). The logical consequence is that institutional traders have to buy euros to invest in Europe.
- On the other side, the FED, which most likely will raise interest rates at least twice in 2016 (but there are those who say even 4 times) and these maneuvers should lead traders to keep buying dollars.
CONCLUSION:these two factors might cancel each other out or at least make it less accentuated the divergence of the two central banks.
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