EZ final CPI estimate for November and Fed’s tone and updated economic projections are the critical drivers for EURUSD.

Intraday pivotal: 1.1260, so far held

The euro bulls appear more anxious about the euro after the last week’s poor EA PMI surveys, especially French December manufacturing PMI reading fell at 49.3 from 54.2 in November.

On top of the macroeconomic data, last week’s ECB monetary policy meeting outcome was in line with our and analysts expectations. The European Central Bank decided to stop its 2.6T-euro bond-buying program. ECB President Mario Draghi confirmed the four years of quantitative easing program the Asset purchase program (APP) will end in Dec 2018.

In unfolding the outlook for the EA economy, Draghi raised concern on the latest data “The latest data and survey results have been weaker than expected.” In macroeconomic projections, the outlook for GDP growth has been revised down in 2018 and 2019. “GDP increasing by 1.9% in 2018, 1.7% in 2019, 1.7% in 2020 and 1.5% in 2021.”.

What’s on today?

We are mainly focusing on EZ final CPI estimate for November. Moody’s Analytics said, “We expect it to conform to expectations and show that inflation pressures in the currency area eased sharply at the middle of the fourth quarter, to 2% y/y, from 2.2% previously.”

TECHNICAL OVERVIEW

The initial setup leans to the first support level finds at 1.1260 below here, 1.1200 exists. The flip side, the first level to watch is 1.1320 above here 1.1390/1.1400, and 1.1440 exists. Getting through here could strengthen the bulls to aim further at 1.1500 levels.

A symmetrical triangle formation is still evident on the daily chart and fell below the ascending trendline. Hence, we expect the price likely to consolidate between 1.1260-1.1330 ahead of today’s data. Weekly trading range moved down to 1.1200-1.1350 from 1.1260-1.1440.

Turning to daily indicators, RSI and oscillator turned back to bearish mode.

Also read: Global economic calendar (Dec 17-21)

We remain cautiously NEUTRAL as we continue to study the action.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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