Last week, the EUR/USD currency pair slowed its decline, losing about 50 points during trading.
The week from November 30 to December 4 will be a test for the foreign exchange market. In the EUR/USD forecast for the week, we look at the prospects of the foreign exchange market.
Day ‘D’ and Hour ‘H’ for EUR/USD
The dynamics of the EUR/USD pair continue to be dictated by market sentiment and expectations. The negative trend in EUR/USD is fundamentally supported by expectations of a Federal Reserve interest rate hike and an expansion of the European Central Bank’s stimulus measures.
What will happen with the ECB will become clear on Thursday, December 3. Mario Draghi is expected to cut deposit rates by 10 bps and announce the continuation of the asset purchase program until March 2017. It is very important that market expectations are confirmed, since further monetary policy easing is already reflected in the current euro rate, and Mario Draghi’s rhetoric, known for his optimistic statements, could lead to a strengthening of the EUR/USD pair.
However, it should not be forgotten about the dollar. During the week, there will be two speeches by Federal Reserve Chair Janet Yellen, as well as the publication of the US Non-Farm Payrolls employment report. Yellen, who initially declared greater transparency of the Fed’s policy, follows in the footsteps of her predecessor Ben Bernanke, using general phrases without attaching to specific numbers or dates.
It is quite possible that Yellen’s speech may disappoint the markets, which could trigger a reduction in long dollar positions and an upward correction in the EUR/USD pair.
Thus, the main fundamental driver for EUR/USD is the divergence between the monetary policies of the Fed and the ECB. However, the speeches of the heads of the two leading central banks, according to experts from ForTrader, carry a high degree of uncertainty and may lead to an increase in EUR/USD.
Potential for EUR/USD Correction Continues to Accumulate
On the daily chart, the EUR/USD pair broke below the 1.06 level and is slowly moving toward the support zone of 1.0465-1.0525. Most technical analysts view the inability of the euro/dollar to continue a confident decline from current levels as a sign of the end of the downward impulse and the possibility of an upward correction, however, the experts from ForTrader believe that this dynamic is due to the waiting tactics of market participants before the most important fundamental events.
It seems that the first half of the week will see the euro/dollar trading in a narrow range, after which there are two possible scenarios:
- Resumption of the Decline
After a short consolidation, EUR/USD will resume its decline, with the target being the support zone of 1.0465 – 1.0525 (previous lows).
- Correction
After a short consolidation, the euro/dollar will enter a corrective phase with a target of 1.08 (Fibonacci level of 23.6%). The first signal of the correction will be a return and consolidation above the 1.06 level.
- The moving averages (EMA 200, 50, and 14) are arranged in descending order from top to bottom, indicating a stable bearish trend.
- The MACD indicator (12, 26, 9) histogram is below the zero line, confirming the downward trend. A trough has been formed, but the growth of the histogram is relatively slow. It is quite possible that another trough will be formed, which would indicate a divergence.
- RSI indicator (14) has been near the 30 level for more than two weeks, showing that the EUR/USD pair is over-sold and indicating the accumulation of potential for a correction.
Experts from ForTrader believe that the most likely scenario is a corrective impulse in the EUR/USD pair targeting 1.08.
Experts from the ForTrader magazine note that the Forex forecast for the EUR/USD pair is not a trading recommendation, but rather a subjective opinion on the market situation.
Discussion of EUR/USD forecasts on the Forex forum
- EUR/USD (Euro / Dollar) – Forecast, Analysis, Trading
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“excerpt”: “Forex EUR/USD weekly forecast for November 30 – December 4: ECB meeting and Yellen speech could lead EUR/USD to a correction up to 1.08.”,
“slug”: “forex-eur-usd-weekly-forecast-november-30-dec
FAQ
What is the main factor affecting EUR/USD this week?
The divergence between the Fed and ECB monetary policies is the main factor influencing EUR/USD.
What events are key for EUR/USD this week?
The ECB meeting on December 3 and speeches by Fed Chair Janet Yellen are key events.
What is the predicted movement for EUR/USD?
Experts suggest a possible correction up to 1.08, but market conditions remain uncertain.
