General analysis EURUSD for 27.12.2021

Current dynamics

At the end of the current year EUR/USD stabilized and retreated from annual lows. The pressure from the aggressive policy of the Fed has decreased. The market seems to take into account the end of QE in March and 2-3 rounds of key rate hikes by the Fed in 2022.

At the same time, the ECB announced plans to cut QE, which helped the European currency stabilize. Lower inflation than in the U.S. and a slight increase in labor costs allow the European regulator to be more cautious. At the same time the euro zone economy is in a difficult situation. First of all, Omicron is forcing governments to impose restrictions, slowing down economic activity. Moreover, growing energy crisis has led to considerable risks. The eurozone cannot get enough gas from Russia because Germany is blocking the certification of the Nord Stream-2 pipeline. The approval process is expected to drag on until mid-2022. This means that the supply restriction will last until the summer and Europe will not be able to fill its gas storage facilities. Rising gas prices, combined with the shutdown of nuclear complexes, put additional strain on energy systems. Some businesses will have to cut production. Household electricity bills also continue to rise, limiting purchasing power. Economic activity is falling and GDP will slow down.

No significant macroeconomic releases from either side are expected today. Tomorrow at 17:00 (GMT+2) the U.S. Consumer Confidence Index will be released.

Support and resistance levels

On the 4-hour chart, the instrument is consolidating near the moving average of the Bollinger sliding band, which is a key resistance level. The indicator has reversed upward and the price range has contracted, indicating that the current trend is about to change. The MACD histogram is correcting at the zero level, maintaining a weak buy signal. Stochastic has left the oversold area, forming a buy signal.

• Support levels: 1.1205, 1.1235, 1.1255, 1.1270, 1.1290, 1.1300.
• Resistance levels: 1.1320, 1.1335, 1.1350, 1.1360, 1.1380.

Trading scenarios

• Long positions should be opened above the level of 1.1325 with a target of 1.1360 and a stop-loss at 1.1395. Implementation period: 1-2 days.
• Short positions can be opened below the level of 1.1310 with a target of 1.1270 and a stop-loss at the level of 1.1325. Implementation period: 1-2 days.