General analysis EURUSD for 01.12.2021
Current dynamics
Yesterday EURUSD finished trading in the positive zone, but the speech of Fed chief Powell significantly limited the upward potential of the pair.
Yesterday Jerome Powell finally dropped the "temporary nature" wording when talking about inflation. Head of the Fed believes that the price pressure will not begin to decline until the second half of 2022, so the regulator in mid-December will hold a meeting to discuss the possibility of an accelerated cessation of redemption of securities. Powell himself stated that a more aggressive rollback of QE is a rational solution.
At the same time, it becomes clear that the Fed is extremely concerned about the price pressure amid the spread of a new strain of Omicron. Getting the virus into the U.S. is a matter of time. The regulator has long sought to achieve full employment, but the new strain could have a significant negative impact on the labor market. The Fed's intention to have more control over inflation indicates a desire to quickly prepare the economy for a change in the parameters of monetary policy.
The market situation is such that the dollar will regain its "safe haven" asset status. The impact of macroeconomic statistics will be limited, while the actions of central banks become more important for the market.
Today at 17:00 (GMT+2), the U.S. manufacturing activity index is expected to be published. Also at 17:00 (GMT+2), Fed Chair Powell will give a speech.
Support and resistance levels
On the 4-hour chart the instrument is correcting in the upper part of Bollinger Bands. The indicator has reversed upwards and the price range has contracted, indicating a correction of the uptrend. MACD histogram is in the positive zone, preserving a buy signal. Stochastic has left the overbought area, forming a sell signal.
- Support levels: 1.1160, 1.1195, 1.1250, 1.1305.
- Resistance levels: 1.1360, 1.1435, 1.1515.
Trading scenarios
- It is possible to open short positions at the current price with a target of 1.1245 and a stop-loss at the level of 1.1365. Implementation period: 1-2 days.
- Long positions should be opened above the level of 1.1370 with a target of 1.1430 and a stop-loss at the level of 1.1345. Implementation period: 1-2 days.